There are over 900,000 tax preparers in the United States.  These preparers include Certified Public Accountants (CPA), Enrolled Agents (EA), and unlicensed PTIN holders.  The only thing all those who get paid to prepare tax returns have in common is that they all have a preparer tax identification number or PTIN.  The only requirement for receiving a PTIN the first time is no felony convictions in the past 10 years and being  current in all individual  and business federal taxes.  Once the PTIN is issued, annual renewals are perfunctory, pay the fee on time and that’s about it.   

Not all preparers have the same level of knowledge.  CPAs and EAs are licensed and must maintain high ethical standards as well as meeting annual continuing education requirements.  While most preparers will do their best and follow the rules, some do not.  Some are what a friend of mine calls “Ethically Challenged” and some are outright criminals.  So why should a taxpayer care? 

Every tax return has, in the fine print, a statement that reads

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.  Declaration of preparer (other than taxpayer) is based on all information of which prepare has any knowledge.”

Note the second sentence.  It means that the preparer is basing the return on what the client or taxpayer says.  The first sentence starts off with “Under penalty of perjury…”  Lying on a federal document is a felony, punishable by a fine of up to $10,000, five years in prison or both; and the taxpayer is on the hook. 

An ethically challenged preparer  may allow or even encourage the taxpayer to take deductions that are not allowed.  The preparer may accept at face value any number put in front of them.  The preparer may not want to tell their client that certain actions are not acceptable and the IRS or the state DOR will catch up to them.  Georgia DOR has a list of known bad preparers that do not violate Georgia law, but will allow / encourage clients to commit perjury. 

I have a client who came to me wanting to know why they were not getting their state refunds and why the State was continually denying their apparently legitimate deductions.  My look at the returns in question indicate that they were properly prepared.  My client attempted to challenge the ruling to no avail.

After investigating, I found out that the preparer they were using had a long history of filing questionable returns so virtually every return received attention.  I also found out that the preparer had been arrested in a raid for criminal misconduct a few years prior.  Amazingly the client continued to allow the preparer to prepare family returns.

This person should never be allowed to prepare another return.  The fact that the preparer would not help the taxpayer with the challenge to the state is also a lack of professionalism.

The other common error is not reviewing the return.  Take the time to review your return line by line and have the preparer explain anything that is not clear.  Remember, you are signing under penalty of perjury.

If you are going to hire someone to prepare your return, you must do your due diligence.  How long has the preparer been doing tax returns?  Has the preparer ever been charged or convicted of any crime related to finance such as fraud?  If the preparer is new, who reviews the return?  What is the policy if the return is audited?  What licenses, if any, does the preparer hold?  Does their continuing education focus in an area that includes your tax situation?  Is the preparer firm a member in good standing with the Better Business Bureau?

How does Books, Taxes & More, LLC measure up to these questions? That is a fair question.  Give us a call.  Interview us.  Check with the Better Business Bureau.  Compare our standards to any company in your experience.