How to Protect Yourself When Choosing a Tax Preparer
If you are concerned about the reliability of your tax preparer, you are not alone. Under IRS rules, anyone with a valid Preparer Tax Identification Number (PTIN) who follows Circular 230 may legally prepare a federal tax return for compensation, even without a professional license. However, not all preparers adhere to these standards, and the taxpayer remains ultimately responsible for the accuracy of the return.
Certified Public Accountants (CPAs) in Florida are held to stricter requirements. A licensed CPA has passed the Uniform CPA Examination and meets rigorous state-mandated standards, allowing them to perform audits, reviews, compilations, and issue formal opinions on financial statements. Verifying a CPA’s license provides added assurance, but licensing alone does not guarantee ethical or competent service. Taxpayers must remain vigilant, recognize warning signs of non-compliant or aggressive preparers, and know when it may be necessary to discontinue a relationship and engage a qualified, trustworthy tax professional.
Here are some basic steps to protect yourself.
Step One: Verify Credentials
Before providing sensitive financial information, confirm that your preparer is properly licensed or credentialed. To verify a CPA’s license, visit www.MyFloridaLicense.com. The IRS also provides guidance on the differences between CPAs, Enrolled Agents (EAs), and other return preparers.
Step Two: Ask About Fees
A reputable tax preparation professional will clearly explain their fees. Be cautious of:
· Refund-based fees
· “Percentage saved” arrangements
· Contingency fees on return preparation
These fee structures are often considered non-compliant or unethical under Circular 230.
Step Three: Review the Return Before Signing
You are ultimately responsible for the accuracy of your return. Make sure to:
· Review the entire return carefully
· Ask questions about any items you do not understand
· Confirm the preparer’s signature and PTIN are included
Never sign a blank return.
Step Four: Trust Your Instincts
If your preparer rushes you, avoids questions, or promises unusually large refunds, it may be time to seek a second opinion from a reputable CPA or a tax attorney. Many problems can be addressed proactively before IRS enforcement actions escalate.
Qualified, ethical, and responsible CPAs and EAs are excellent for tax preparation and compliance, but attorneys are often necessary for navigating enforcement actions, negotiating with the IRS, or representing clients in Tax Court. If you are now facing large penalties, collections, or other IRS or Tax Court actions as a result of working with a tax preparer who was unqualified or non-compliant, contact Carbone Law, P.A. to schedule a consultation and discuss your options.
For common warning signs of non-compliant preparers, see Part 1: 5 Warning Signs of a Non-Compliant Tax Preparer.