Getting the Right Tax Preparation Agent

Tax law is hardly a simple area of study–ask anyone going for their J.D. or Ph.D in the field and they’ll likely tell just how much of a headache it actually is. With tax season underway, we’re starting to see more and more “tax preparation professionals” advertising their services, from television advertisements to dancing sign-holders dressed up in all manner of costumes on the roadside. As the IRS notes on their website, ( http://1.usa.gov/VjTZg3 ) if something goes wrong with your tax preparations, you’ll be the one facing the penalties, not the return preparer. This begs the question, how well do you know your tax preparation agent? In a field that’s becoming more and more automated with advances in tax-preparation of software suites, it’s becoming increasingly necessary to learn a bit about your tax preparer before handing them the keys, so to speak. Here are a few things to consider when looking for a tax preparer at the right price for your needs.

1. Know exactly who will be preparing your taxes.

Generally speaking, depending on the type of business you’re bringing your taxes to, the actual individuals preparing and filing your tax return will fall under these categories: Registered tax return preparers, enrolled agents, certified public accountants (CPAs), and tax attorneys. The requirements for each position become increasingly more rigorous with tax attorneys themselves having passed a state bar exam. While a tax attorney won’t be necessary for the majority of people looking to have specialists take care of the preparations for them, there are a number of cases where choosing an enrolled agent, CPA, or tax attorney offer distinct advantages, such as handling estate and property laws.

2. Know if you may need some additional assistance.

While registered tax return preparers have followed all of the steps necessary to prepare your taxes for you, they can’t assist you in areas such as “audits, collection, and appeals”. If you anticipate any additional problems popping up, or if there’s even a possibility of running into a few snags along the way, it’s a much better idea to enlist the assistance of an enrolled agent, CPA or tax attorney. Unlike the registered tax return preparers, these agents can assist and represent you before the IRS and have the appropriate training to do so.

3. Check up on the organization your preparer is working for.

It’s a good idea to get an idea of how the company handling your tax return does business–the IRS suggests making sure that your preparer is affiliated with a professional organization or company that has both a strong code of ethics and provides their employees or affiliates with continuing education opportunities. Tax law changes at a pretty regular pace, and you’ll want a preparer who’s up to date on any new alterations to it.

With the flood of seemingly capable tax preparation agents around tax season, it’s easy to put your financial life into the hands of someone who may not be the right fit for the job. Above all else, get to know your tax preparation agent before handing over the paperwork–doing so can save you a lot of hassle in the future.

Sincerely,

Wayne von Borstel, CLU, ChFC, CFP®, MSFS

Personal Financial Advocate