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by Harry Rabb, C.P.A.
Special to Tropical Breeze
If you've ever been to any gathering of
adults, sooner or later the topic of taxes comes up. Someone is
bound to be giving advice gleaned from "my" tax adviser. There's a
sense of proprietorship and pride knowing you've picked the right
person out of the crowd.
And what a crowd there is! Between the
American Association of Certified Public Accountants, the American
Bar Association's Taxation Section and enrolled agents with active
licenses there are nearly 400,000 tax professionals who adhere to
IRS professional guidelines.
But there are an untold number of
unlicensed tax preparers across the 48 states that do not require
licensing and have no standards of professional conduct (California
and Oregon require licensing for all preparers). This has long been
a major concern of the National Taxpayer Advocate, Nina E. Olsen,
who has been seeking legislation to require licensing and testing
of all tax professionals since 2002.
With all those choices, how can you decide
who to hire to provide you with tax-planning advice and to prepare
your tax returns? A little quick elimination is possible based on
five critical factors:
Look for a tax professional who e-files or
prepares tax returns by computer. In the 21st century, with the low
cost of computers and the wide availability of professional tax
software, there is no excuse for a tax pro not to be using a
computer. Using a computer and filing electronically eliminates a
myriad of common errors. It gives you proof your return was filed.
You get faster refunds that way.
Of the vast tax preparer population, only
277,680 are licensed Electronic Return Originators (EROs) --
professionals with the authority to file tax returns
electronically. There's a certain degree of IRS oversight
involved. To become an ERO, you must pass a federal suitability
check, which may include the following:
IRS routinely audits compliance of EROs.
So you are assured of a certain level of ethical responsibility. No
guarantees, though. Sometimes, new storefronts spring up overnight.
By the time IRS comes to shut them down, they are gone.
Look for a tax professional who is a
member of a professional organization. CPAs, enrolled agents,
attorneys and California and Oregon licensees must all meet ethical
and educational standards. In the 48 states that have no licensing
requirements, you will find some long-term preparers who do
wonderful, dedicated work for their clients.
Pretty much all the unlicensed preparers
keep up to date by belonging to national associations, like the
National Association of Tax Professionals and the National
Association of Tax Professionals. These organizations have
stringent standards for continuing education.
You can find a local professional using
the look-up tool on the Web sites of the professional associations.
The Web sites allow you to search by location and by area of
expertise or specialty.
Don't overlook small, home-based offices.
Sometimes, you can find some excellent skills, values and personal
service from folks with who keep their overhead low.
Moving up to offices, small firms will
often give you more personal attention than bustling, larger
operations. The national firms will offer you help with some of the
more complex issues requiring private-letter rulings, opinion
letters on gray areas and nested entities.
Ensure the tax pro's office is open
year-round. Schedule at least one planning appointment aside from
your tax-preparation appointment. You'd be surprised how much help
a tax pro can be in reducing your taxes and increasing your wealth
-- even if you only have a job and no complicated tax issues.
Find someone who understands your tax
situation and your industry. The best way to find someone is to
start by asking people you know. Folks your age, working in your
industry, who are happy with their tax professional, can give you
recommendations. Remember to vet those recommendations as you would
any others.
When you are going through tough
situations like divorce, unemployment, foreclosures, tax debt or
unfiled tax returns, you need someone who knows the issues that
specifically relate to you. When you're under pressure, you don't
want someone who's going to be learning on your time.
When your situation means that you're
going to need someone to speak to IRS on your behalf, the only
people who can do that are attorneys, CPAs and enrolled agents.
You'll need to sign a power of attorney for them to represent you
without your presence.
One of the most important things to
consider when working with a tax professional is how they relate to
you. Do they make you feel dumb and intimidated? Stay away. You
want someone you can call up when you need help. Be prepared to pay
for the time and advice. But work with someone you are not afraid
to call before you take any financial steps during the year.
Don't chase after recommendations from
friends who've got some great guru who can get you huge refunds.
Those small populations of fraudulent preparers who make up numbers
to put on your tax return get their clients into trouble. IRS is
actively chasing and finding them. When IRS does find them, they
audit all the returns that preparer has signed.
Don't go to your preparer and ask that
last year's numbers be used or look for your answers on their
ceiling. Take the extra time to get your records in order before
you go to your tax appointment. You're going to come out ahead.
Experience shows that your real numbers are generally higher than
you dare to estimate.
Follow these five simple, but important,
steps to finding or selecting a tax professional and you'll have
the best tax experience you've ever had. And you'll have bragging
rights to your own tax pro.
• • •
This information is provided as a public
service and should not be construed as individual accounting or tax
planning advice. For information on how these general principles
apply to your situation, please consult an accounting or tax
professional.
Harry Rabb is a C.P.A. and partner in
Cormier & Rabb, CPAs, Accounting, Tax and Consulting Services,
28163 U.S. Hwy. 19 N., Ste. 204, Clearwater. Call 727-796-2459.
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