Ten (10) Red Flags to Look Out for When Hiring a Tax Preparer
“We’ll pay YOU $100 to do your taxes!”
“Free Beats Headphones!”
These are just a few of the ridiculous offers we’ve seen posted on tax-preparers storefronts. And while we’re over here wondering where the advertisements are for “skilled and seasoned Agents, Lawyers and CPAs,” many taxpayers are actually being lured in by the free gifts. This worries us, because a lot of tax preparers out there are scam artists who either don’t know what they’re doing and don’t help you get the most of your deductions and credits, or who know exactly what they’re doing and manage to squirrel away a large chunk of your refund for themselves. In neither of these instances is a “free 100 bucks” or “free Beats” worth the loss.
Furthermore, more often than not, there’s a catch to all the free stuff and low rates tax preparers offer. Those “low, low rates” promised quickly go way, way up once fees and taxes are added on.
And those promising a faster return, because they know that that’s what people want? Many times, a faster return just isn’t possible, especially if you’re e-filing. According to the IRS:
“Authorized e-file providers are prohibited from submitting electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G and 1099-R from the taxpayer.”
On top of that, it’s not just the act of submitting returns without all the proper forms that’s banned; preparers aren’t even allowed to advertise that they can prepare returns without these documents. Yet, many preparers are not only willing to break this simple rule, but to FLAUNT it. Which makes us wonder: what other rules are they willing to violate?
We don’t want you to have to find out. To help you avoid an IRS headache, check out these ten (10) red flags to look for when looking to hire a tax preparer for your 2014 taxes:
1. Tax preparers who do not have a PTIN (Preparer Tax Identification Number). The IRS mandates that all tax preparers have a valid, 2015 PTIN. If yours doesn’t, then they’re not legally allowed to prepare your return.
2. Tax preparers who won’t sign your return. If they’re not willing or able to sign your return, they’re not allowed to submit your return.
3. Preparers who insist that you mail in your own return. Preparers are required to submit prepared returns electronically. If they don’t give you the option and won’t provide an explanation, be weary—there’s a reason, and chances are, it’s not a legitimate one!
4. Tax preparers who promise a higher refund than what you received last year, when your situation is the exact same this year. Tax rates haven’t changed much in the past two years, so if your refund is much higher than it was last year, your tax preparer may have inflated your deductions, which is a big no-no.
5. Tax preparers who want you to sign a blank return. You wouldn’t sign a blank check. You wouldn’t sign a contract without reading it first. Don’t sign a return until you can review it—meaning, when it’s filled out and there’s something to actually review.
6. Tax preparers who want to deposit your refund into an account that’s not yours. Preparers will give you a bunch of reasons for wanting to do this, but not one of them is legitimate, nor does the IRS recognize any as legal. If you work with a tax preparer that suggests this, you stand to lose your refund permanently.
7. Preparers who base their fee on a percentage of your refund. Statistically speaking, preparers who do this are more likely to be engaging in fraud or conduct that you’ll pay for later. Fees can be based on a number of factors, but your refund amount should never be one of them.
8. Preparers who promise refunds by a certain date. The IRS is adamant when it says that tax-preparers should not expect their refunds within a certain time. There are many reasons a refund might be delayed, and tax-preparers have no control over this. Those that claim they do are not to be trusted.
9. Tax preparers who guarantee a refund before even checking out your tax documents. No one can know just how much they’ll receive, or if they’ll receive anything, until they run the numbers. Same goes for preparers who tell you that you won’t owe anything—they can’t know that until they review your documents. Be wary of tax preparers who claim otherwise.
10. Preparers who imply endorsement by the IRS. Though the IRS recognizes certain credentials such as CPAs, attorneys, Enrolled Actuaries and Enrolled Agents, they don’t endorse any individual preparers.
Now, there is not always a rule against offering free headphones or a free meal to taxpayers to get them in the door, but we just caution you to consider how much you’re really paying—including for those “extras”—when your tax preparer is willing to offer you money and expensive gifts to do your taxes.
When looking for a tax preparer, don’t be greedy. Treat your taxes like the business task it is, and use your judgment. You want your taxes to be done correctly, because if they’re not, you will be the one paying for it. And your tax preparer? They’ll be sitting nicely on an island sipping Mai-Thais with your money.
To make sure you’re the one sitting nicely at the end of tax season, visit http://www.irsallstar.com/our-services#16 to see how we can help you prepare your taxes in a completely legal and trustworthy way.