Internal Revenue Service Commissioner Doug Shulman issued a proposal last month to federally regulate tax preparers The IRS wants to set new rules for income tax preparers nationwide in order to help reduce tax fraud and improve compliance.
Is the problem real? You betcha! About 60% of all Americans hire a tax preparer to file their returns. Unfortunately, the IRS says 56% of all returns prepared by a paid tax preparer contain "significant" mistakes!
So far, California and Oregon are the only states that have tax education requirements for its income tax preparers. We expect that other states will, eventually, follow.
Last year, New York passed legislation to require its tax preparers to register with the state, but it does not yet enforce education requirements.
That means that there are more than 600,000 unregulated tax preparers out there as we speak.
Will government regulation help? Well, the idea sounds good in theory (like many Washington proposals), but here's the problem: as always, when the government is involved, it will take some time before regulations are implemented.
So rather than wait around for Washington, start protecting yourself today! Here are 10 key questions to ask when it comes to selecting a tax preparer:
- How many years have you been preparing tax returns?
- Are you a CPA or have you completed any special certification courses/continuing
education? - Are you available year-round for tax planning?
- How do you charge for tax preparation? An estimate of cost?
- Is your practice focused on any particular area of expertise (small business, estate planning, etc.)?
- What is your level of expertise/experience with my type of tax return?
Will you provide me with a copy of my completed tax return and return all original documentation used in my tax form's preparation? - If the IRS questions any part of my return, will you assist me? For an additional fee or as part of my service?
- How do you keep up-to-date on the latest tax laws?
- What safeguards are in place to ensure accuracy of my tax return?
Taking a few minutes now to ask these questions can save you from costly tax mistakes, missed deductions and possibly even dealing with the IRS over problems on your return!
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