Choosing Your Tax Practitioner

Posted on | February 16, 2010 | No Comments

Choosing Your Tax Practitioner
By Aaron Blau, E.A.

In any business, the circle of advisors you choose is of utmost importance.  They are a library of knowledge for you to use as a resource and a clearinghouse for your ideas.  Choosing the right partner can contribute to making, or breaking, your financial future. After all, you are legally responsible for every item on your own tax return, even if you pay someone else to do it. 

Who is Qualified?

In the State of Arizona, there are no licensing requirements to prepare tax returns.  This means that anybody can simply “hang a shingle” and call themselves a tax preparer.  Lawyers, Certified Public Accountants and Enrolled Agents are professionals who are licensed either by the State or the US Treasury Department.  These practitioners have continuing education requirements, must abide by a strict code of ethics, and have oversight in place in the case of violations.  A license does not guarantee a perfect tax return, but it does give you recourse in the case of a bad preparer.  Are there good unlicensed practitioners out there?  Absolutely!  That’s why you can’t rely on the credentials alone.  Ask your friends and colleagues for referrals, and most importantly ….

Ask Good Questions

Do you have clients like me? If you have advanced issues, or have a complicated business model, it is important to give your potential practitioner the full picture by giving them access to your previously filed returns. 

Who will be preparing my returns?  Many larger firms will pass your information to lower level, less costly, and less experienced preparers.  This isn’t always a bad thing, but you deserve to know who is working your return. 

What happens if I receive an IRS notice?  Believe it or not, the IRS often issues notices that are wrong.  This may not be your fault, and may not be the fault of your practitioner either.  Will your practitioner answer these letters for free, or will they charge?  What will they do if you are audited?

Red Flags – Signs to stay away!

If your practitioner demonstrates these qualities, it is best to run away:

• Guarantees a refund.  Your refund is as much the cause of your preparer as the weather is a cause of the weatherman. 
• Files your tax return without reviewing actual W-2s and documentation that comes in envelopes marked “Important Tax Documents enclosed.”
• Bases their fee on the size of your refund.  This is strictly prohibited by the AICPA and US Treasury Department.
• Does not provide you the opportunity to review your tax return before e-filing it. 
• Does not sign the tax return as a paid preparer. 

Using these tips, you are setting yourself up for success in the upcoming tax season!  Many happy returns!

Aaron Blau, E.A. is the Vice President of Alan Blau & Associates, Ltd, a Tempe accounting firm specializing in small business and individual income tax and accounting services.  He is the Vice President of the Central Arizona Chapter of Enrolled Agents and a member of the Government Relations Committee for the National Association of Enrolled Agents. He regularly presents QuickBooks training for SCORE and speaks on professional ethics.

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