NEW YORK (MainStreet) — When shopping for a professional tax preparer, here is a list of questions to ask candidates -
1. DO YOU HAVE A VALID PTIN?
This is the most important question. Only individuals who have registered with the Internal Revenue Service and received a Preparer Tax Identification Number (PTIN) can prepare tax returns, or assist in the preparation of tax returns, for compensation. If the preparer does not have a valid PTIN walk out the door immediately!
2. WILL YOU BE SIGNING THE FINISHED RETURN?
Another very important question. All paid tax preparers must sign, and enter their PTIN on, all returns they prepare. If the preparer is not going to sign your finished returns walk out the door immediately!'
3. ARE YOU FAMILIAR WITH STATE TAX RETURNS FOR MY STATE?
You want to be sure the preparer is knowledgeable and experienced in the preparation of all the state and local resident, non-resident, and part-year resident income tax returns that you must file, and is able to prepare the returns of these states. Some states require specific registration or licensure for tax return preparers.
4. DO YOU HAVE ANY TAX CREDENTIALS OR CERTIFICATIONS?
Is the preparer an EA, an ATP or an ATA? Has he or she received a “Record of Completion” for the IRS Annual Filing Season Program?
A credential or certification is not a necessary requirement – but it helps to identify the preparer’s level of competence and currency in 1040 preparation. See "How to Choose a Tax Preparer Amid All the Alphabet Soup" for detailed information on specific tax credentials and certifications.
5. DO YOU BELONG TO ANY TAX PREPARER MEMBERSHIP ORGANIZATIONS?
I firmly believe that tax preparers who belong to membership organizations like the National Association of Tax Professionals, the National Society of Tax Professionals, the National Society of Enrolled Agents and the National Society of Accountants are more serious and conscientious, and ultimately more competent and current in 1040 preparation, than those who do not.
Preparers join these organizations to gain access to quality continued professional education (CPE) in tax topics, tax research and online and print publications to keep them up-to-date on tax issues. And most organizations have a Code of Ethics or Standards of Professional Conduct to which members must adhere.
6. WHAT IS YOUR BACKGROUND IN TAX PREPARATION?
How did the preparer get started in “the business”? How did he or she learn how to prepare 1040s? Did the preparer apprentice with a large firm or a small independent preparer? Does he or she specialize in any particular types of returns or taxpayers?
7. ARE YOU EXPERIENCED IN PREPARING TAX RETURNS FOR MY TRADE OR PROFESSION OR MY UNIQUE SITUATION?
You want a preparer who is familiar with the specific deductions, credits, strategies, and loopholes available to actors, construction workers, fire fighters, nurses, outside salespersons, police officers, real estate professionals, teachers, truck drivers or whatever your trade or profession may be.
Are you self-employed? Do you have a farm, foreign bank accounts or investments in hedge fund limited partnerships? You also want a preparer who is familiar with the specific, deductions, credits, strategies, loophole, and filing requirements of your unique tax situations.
8. HOW DO YOU DETERMINE YOUR FEE?
Do not ask how much the preparer will charge for preparing your return. It is literally impossible for a tax preparer to know upfront how much it will cost to prepare a specific return until after the return has actually been prepared.
But you do want to know the methods the tax preparer will use to calculate your fee. Does the preparer have an hourly rate or a standard per form fee? Or does he or she use a “hybrid method” – a base minimum fee for each particular form and schedule, with an additional hourly fee if additional work is required? Ask the preparer for a copy of his or her Fee Schedule.
Be aware that whatever the method of determining the fee, the more involved and time-consuming the return the greater the fee - and the better organized you are the lower the fee.
9. WHAT IF MY RETURN IS QUESTIONED OR AUDITED BY THE IRS OR THE STATE?
Will the preparer respond to any tax-related correspondence you receive? Will he or she go to an audit with you or attend in your place as your legal representative? What are the additional fees for responding to a notice or an audit?
10. ARE YOU AVAILABLE DURING THE YEAR TO ANSWER TAX QUESTIONS OR HELP WITH TAX PLANNING?
Will the preparer be available on a year-round basis for telephone, email or sit-down consultation - or will he or she disappear on April 16? Will the preparer provide you with information on, or be available to answer questions about, changes to federal and state tax law during the year?
--Written by Robert D. Flach for MainStreet