5 Types of Tax Preparers to avoid.

The Taxpayer (you) are legally responsible for what’s on your return even if it is prepared by someone else.  While most tax preparers are professional and provide excellent service.  There are some dishonest preparers out there who can cause big financial and legal problems for their clients.

1. Avoid any Tax Preparer who guarantees you a bigger refund than any other preparer.  If the Preparer’s fee also happens to be a percentage of your refund; consider this combination a big red flag. False deductions, unallowable deductions, inflated expenses etc. will get you a bigger refund than you are entitled to and it could also get you prison time. If your return were to get audited 3 years later, chances are the Preparer who created the bogus return will suddenly stop returning  your phone calls (assuming they are still around).

“Tax evasion is both risky and a crime, punishable by up to 5 years imprisonment and a $250,000 fine.” IRS

1. Avoid a Tax Preparer who refuses to sign the return.  This may be their way of denying any responsibility if  you receive a notice from the IRS about the return. A paid preparer is legally required  to sign your return.
2. Avoid firms who outsource the actual preparation of your return to foreign countries. Foreign countries do not have the same privacy and security laws that we have in the U.S. You have a right to know who is gong to have access to your financial records.
3. Avoid those who argue that taxes are illegal and that you do not have to file a return. According to the IRS, the courts have repeatedly rejected these arguments as frivolous and routinely impose financial penalties for raising such frivolous arguments.
4. Avoid Preparers who knowingly take on projects that they  lack the skill and experience to handle.  This is especially important for business owners or individuals with multiple activities that have an impact on their tax situation. You shouldn’t have to pay for your Preparers lack of experience.  Interview the tax professional you are considering and ask questions about their knowledge and experience in handling difficult situations.

Greg Fey, EA

Providing Tax Help to the residents and business owners of Crescenta Valley for 20 years.