Although not "tax preparers" by legal definition, accountants, attorneys, and enrolled agents are choices you may want to consider for tax preparation and other tax matters, and are, therefore, included in this report.

The Internal Revenue Service’s definition includes any person who furnishes the taxpayer with sufficient information and advice (again, for a fee) so that the completion of their return is largely a mechanical or clerical matter.

 

 

Where to Get Free Help

First, you may be able to prepare your own return if you can only get a little assistance.

Here are some sources:

 

FOR IRS ASSISTANCE

Under its VITA (Volunteer Income Tax Assistance) program, the IRS offers free assistance to taxpayers in preparing returns. Call them at 1 (800) 829-1040 for answers to your individual questions or to locate a VITA site near you. Taxpayers who are physically or mentally unable to prepare their own returns, including handicapped, elderly and non-English-speaking taxpayers, may qualify for help through this program. Keep in mind, though, that IRS lines are frequently busy during tax season and that IRS employees and VITA volunteers, though trained by the IRS, do not qualify as income tax preparers.

 

ASSISTANCE FOR SENIOR CITIZENS

Help for senior citizens 60 years or older is available, free, from the TCE (Tax Counseling for the Elderly) program, a joint program of the American Association of Retired persons and the IRS. (TCE volunteers will assist younger people as well, but will give priority to those over 60.) The AARP uses IRS-trained volunteers to handle the special needs of the elderly and to ensure that they receive all the tax credits that are due them. Because the program was designed for the returns of senior citizens, the volunteers are trained to assist with simpler returns.

 

Some TCE sites will also arrange for home visits to prepare returns for shut-ins or disabled persons who cannot visit the AARP locations.

Since this is a voluntary service, the personnel, again, are not qualified tax preparers and are not responsible for the information or advice they give.

For more information, or to locate a TCE site near you, contact the AARP at 601 E Street N.W., Washington, D.C. 20049, or call them toll-free at 1 (888) 227-7669. You can also locate a TCE site by calling the IRS at 1 (800) 829-1040.

 

COMPUTER PROGRAMS

If you use a computer and feel you can do your own taxes, you may need only tax software as your companion through the tax maze. If you choose this route, be sure you use current software. And don’t expect software to advise you as a tax expert would.

 

Types of Tax Preparers

Here are some of the different types of tax preparers from which you will have to choose if you want to use the services of a tax preparer.

 

LOCAL TAX SERVICES

Local tax services that crop up in rented storefronts at tax time are usually legitimate and competent.

 

NATIONAL CHAINS

National chains or other commercial services offer convenience at moderate rates. During tax time their offices are open nights and weekends, and you can walk in for service on a first-come first-served basis. Their staff are required to undergo some instruction and training before being hired. However, these tax preparers range from beginners to experienced and do tax work only seasonally as a second job, usually at minimum wage plus commission. Like local services, they are required to be bonded.

 

If your return is complicated or for a business, you may not want to use a national tax service unless you are familiar with your preparer or confident that the personnel in a particular office are unusually qualified.

 

A national chain is a good choice if you want to have a routine tax return prepared. A chain may even be willing to review your completed return free on the chance that they will discover some error for which they can charge. (At the same time, they may fail to see legitimate tax deductions and thus cost you more.)

 

The Internal Revenue Service monitors these commercial tax preparers (that is, unlicensed local services and national chains) through its local offices to ensure their compliance with tax regulations. Bear in mind that these local services and national chains of commercial preparers cannot represent you in dealings with the IRS. This is true even of unlicensed preparers who have earned and use the "accredited tax preparer designation."

 

ENROLLED AGENTS

An enrolled agent is a former IRS employee or alumnus of a comprehensive IRS-administered examination who has IRS approval to represent taxpayers before them. These agents must maintain professional accreditation by completing a minimum number of credit hours each year of continuing education in tax regulations and accounting methods. Their fee structures may vary greatly and are usually calculated by the hour.

 

If your tax return is more complex, if you will need to deal with several different tax forms, or if marriage, death, a recent inheritance, or other circumstances have changed your economic situation, an enrolled agent can help. They can also assist you in planning to reduce your taxes in the future.

Many enrolled agents limit their work to a given tax area, so you should ask about an agent’s specific area.

 

CERTIFIED PUBLIC ACCOUNTANTS

A certified public accountant will have a college degree or the equivalent and will have passed a state professional qualifying exam. Although highly skilled in accounting methods, they are not necessarily tax experts, so you should be certain the CPA is experienced in handling tax matters and enrolled in a continuing education program to keep updated on tax laws before you engage one to prepare your tax returns.

 

Use a CPA experienced in tax matters if your tax return is complex or if a major change in your lifestyle (marriage, divorce, retirement, etc.) may have substantial tax consequences. Because they are sometimes considered to be "top of the line" in tax assistance, their fees will be higher, and you should expect them to give you solid tax planning and financial advice.

 

You can ask friends for CPA referrals, or you can ask for a recommendation from your employer or the tax department of a CPA firm. You might also contact the Association of Certified Public Accountants for a list of members in your area.

 

Enrolled agents and CPAs can represent you in audits and disputes with the IRS and can even go in your place to one of these.

 

Where to Call for Tax Preparers in Your Area

You can obtain a list of enrolled agents in your area by calling the National Association of Enrolled Agents, 1 (800) 424-4339.

 

To obtain a list of CPAs, enrolled agents, and other tax preparers who are members of the National Society of Public Accountants, call (703) 549-6400. You can obtain a list of their members by the zip code of your post office.

 

TAX ATTORNEYS

A tax attorney may be your choice if you are interested in sheltering part of your income. They can advise you on tax and financial planning, and a specialist may be well informed on tax laws and their applications. They also specialize in handling tax disputes. They usually don’t prepare returns, and their fees are higher than those of any other tax preparer.

 

What Kind of Tax Preparer Do You Need?

 

Before you choose a tax preparer, ask yourself some questions:

 

1. What kind of service do you need? Do you only want someone to complete your tax return now, or to act as financial adviser all year round?

2. What can you afford to pay?

3. Is it important to have the same person prepare your taxes next year?

When you decide what kind of preparer you want, ask for referrals from friends and colleagues. You will have to determine for yourself the level of expertise of tax preparers other than recognized professionals.

 

What to Find Out about the Tax Preparer

When you have the name of a tax preparer you might want to use, interview the preparer, discuss the cost of the service, and ask for an estimate. Fees should be based on the complexity of the return and never on the size of the tax saving or refund. A tax preparer should never guarantee a refund before completing a return.

 

Ask about the preparer’s training and experience, how they keep abreast of tax laws and changes, how many tax forms they complete each year. If you are the owner of a small business or are self-employed, a physician or child care worker, for example, you will want to know whether the tax preparer has expertise in the appropriate business or professional area. What is the turnaround time for the return? Will he take responsibility for any penalty arising from his error or misjudgment? If you’re audited, can you reach your tax preparer? Can he, and will he, represent you in an audit? What experience has he had in representing his clients at an audit or in a dispute? What will he charge to represent you?

 

When you’ve selected a tax preparer, be sure to understand the terms of your contract and read carefully any fine print before you sign.

 

Organize to Help your Tax Preparer Help You

 

Once you’ve selected your tax preparer, you should realize that he or she needs a clear understanding of your economic life and tax situation. You can assist the preparer by taking these steps:

 

4. Compile all documents and other information you think may apply to your taxes. You can save time and money by organizing these materials into categories.

5. Take a copy of your last year’s return the first time you use this tax preparer. Note changes from last year.

6. Make a list of the questions you want to ask the tax preparer.

7. Try to keep up on some of the changes in tax laws that might apply to you.

8. Contact your preparer early, as soon as you have compiled the documents you need. Remember that the closer the tax deadline, the busier tax preparers are and the less time you have to gather missing information.

 

A Few Precautions

Go over with your preparer, in person, your deductions. But remember that, although the preparer may not necessarily ask to see all your documents or

If you’ve never used a tax preparer before (or even if you have), you may feel you need a course in how to choose one. How can you tell one tax preparer from another, and how do you know which one you need?

 

What is a Tax Preparer?

A tax preparer is generally defined as someone who prepares or assists in preparing your tax return for a fee. That definition does not, as a rule, include accountants or their employees, attorneys or their employees, enrolled agents, and certain others who are required to be licensedrequest proof of the figures you give, they are not responsible for processing false information they understood to be true.

 

Never sign a blank return (this is like signing a blank check, and it is against the law for the tax preparer to ask you to do it). Also, don’t sign a return filled out in pencil. Look your return over carefully before you sign it. Then, keep a copy of your return and the supporting documents for at least three years after the filing date. Your preparer must retain a copy of the return for four years.

Remember that the person ultimately responsible for the tax return you file is you.

 

What to Do if you Have a Complaint

If you have a complaint against a tax preparer relating to your transaction with him or her, you can call the Better Business Bureau. If a tax preparer violates any provision of the laws pertaining to tax preparers (such as engaging in fraudulent advertising, failing to give you a copy of anything you signed, or refusing to return your records after you've paid for the services, etc.), you may sue the tax preparer to enforce performance of the duty he or she failed to perform, for a $1,000 penalty, or both. If you prevail, the tax preparer will have to pay also your attorney's fees and costs of suit.