Be prudent when picking a tax preparer

It has arrived.

The event that summons feelings of dread in even the most stoic has snuck up again this year.

Tax season.

And that means that, for the next few months, Palm Beach County and Treasure Coast residents are going to be bombarded with commercials, signs, people dressed up as Statues of Liberty — all advertising the services of various tax preparers.

Indeed, almost 60 percent of Americans use paid tax preparers to do their taxes, according to the Internal Revenue Service.

But not all tax preparers are created equal. Choosing one who is inept or fraudulent could cost a lot, since it's you who's legally responsible for the information on the tax forms.

"There are several classes of preparers out there," said Ronald Warner, a

West Palm Beach-based certified public accountant and former IRS field agent. He said there are many reputable tax preparers out there, but that there are also "those people who just decide they know tax law and hang out a shingle. They have no requirements; they may not be caught up with current laws and regulations."

Only three states — California, Oregon and Maryland — require all tax preparers to register, according to Tobie Stanger, a senior editor at Consumer Reports.

In addition, some professionals, such as lawyers, certified public accountants and enrolled agents, are licensed by their states or enrolled to practice by the IRS.

Still, the majority of the estimated 900,000 to 1.2 million paid tax preparers undergo no vetting or registration before they do your taxes for you.

The IRS has announced plans to require tax preparers to register with the government, pass a competency test, adhere to ethical standards and take continuing education courses. The IRS says it hopes to have all preparers registered by 2011, meaning that the new regulations will not affect this year's tax season.

So if you're thinking of having someone prepare your taxes for you, consider these tips from experts:

CONSIDER YOUR LIFE AND FINANCES BEFORE DECIDING WHAT TO DO.

"If you have a one-paycheck job, and don't plan to itemize, that's pretty simple," Stanger said. "You may just want to do it yourself and use free tax software to help you."

People or businesses with more complicated filings should also look at their situation, though.

"Identify your needs as a taxpayer," said Jill Senso, education coordinator for the National Association of Tax Professionals. "If you don't have a small business, you may decide you don't need a CPA to do your taxes, since they tend to be a little more expensive."

Pete Sepp of the National Taxpayers Union said people or businesses with complex situations may want to look for specialists.

"If you're a dentist, you may be able to find someone who specializes in dental tax forms, who knows that some piece of equipment depreciates strangely or understands different exemptions," he said.

GET REFERRALS. CHECK ON THEIR COMMUNITY TIES.

"A reputable tax preparer will have no problem giving you references," said Kay Bell, a contributing tax editor at Bankrate.com.

Experts said to make sure to get more than one reference, and to ask how long the preparer has been in the community.

"Make sure they'll be around after filing season is over, in case the IRS comes back to you with questions," Bell said.

ASK ABOUT EXPERIENCE AND TRAINING.

Only CPAs, enrolled agents and attorneys are allowed to represent a taxpayer in front of the IRS in case of an audit, collection, appeal, or other matter. These three professions are also bound by ethical standards and must undergo education and registration or licensing requirements.

But even those with such designations may not deal with taxes on a regular basis. Find out whether the preparer is affiliated with a professional organization with a code of ethics and that provides its members with continuing education.

"Ask questions," Warner said. "Did you attend seminars to get up to date on the latest tax laws? If so, how many hours? Who sponsored it?"

Senso said that continuing education is the only way to find out about certain tax credits — credits that taxpayers often won't know to ask for themselves.

Bell also suggested that taxpayers find someone with at least 10 years of experience. "That's not to say a new person couldn't be good, but someone more experienced will be more comfortable with the process," she said.

LOOK TO SEE IF YOU MIGHT BENEFIT FROM FREE TAX FILING PROGRAMS.

The United Way of Palm Beach County sponsors a Volunteer Income Tax Assistance program that works with the IRS for people whose household income is $49,000 or less. Spokeswoman Dianne Laubert said about 55,000 people in Palm Beach County are eligible.

More than 200 volunteers for the program have to go through training and take a test with the IRS before helping people with their forms.

The AARP also has a free tax assistance program, designed for people ages 60 and up, although tax counselor Bobby Caruso said they won't turn anyone away.

For families and individuals making less than $57,000, the IRS offers Free File computer software programs that help taxpayers prepare their returns at no charge.

WATCH OUT FOR SHADY PRACTICES OR CLAIMS.

The experts said to walk away from anyone who says they can get a bigger refund than other people, or from preparers who try to base their commission as a percent of your return. Remember: you are the one ultimately liable for what goes on the forms.

In addition, shy away from those who try to get you to sign blank returns or who refuse to sign the returns themselves.


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