(Source: The Dallas Morning News)
By Pamela Yip, The Dallas Morning News
March 28--Of all the financial advisers you have, the last person you need letting you
down right now is your tax preparer.
Remember this: Even though you've hired someone to prepare your income
tax return, you are ultimately responsible and liable for the accuracy of the
information.
That's why it's so important that you take care in selecting a tax
professional. You want someone you can trust, who will prepare accurate
returns and will properly safeguard your confidential information.
"You want somebody who has experience, who is trained, somebody who is up
to date on the latest changes and can suggest tax-saving ideas for the current
or future years," said Thomas M. Bloch, former chief executive of H&R Block
and son of Henry Bloch, founder of the tax preparation giant.
It's critical to find a preparer "who will stand behind their work," said
Bloch, author of Many Happy Returns: The Story of Henry Bloch, America's Tax
Man.
"Do they guarantee the accuracy of the tax return?" he said. "If you're
audited, you want to know that person or that firm will be around to assist
you."
Other tips are:
Watch out for a preparer who promises you a bigger refund without knowing
your tax situation.
Never sign a tax return without looking it over to make sure it's
accurate.
Make sure you trust the tax preparer.
"When you choose someone to prepare your tax return, you turn over to
that person some real sensitive and confidential information, financial and
personal, on yourself and your family," said Eric Hoefnagel, a Dallas enrolled
agent. "For that kind of information to fall into the wrong hands in this day
and age of identity theft, that can have a devastating effect on your life."
Of course, most tax preparers do a good job, but the ones who veer off
can really cause trouble for their clients.
"Such preparers derive financial gain by skimming a portion of their
clients' refunds and charging inflated fees for return preparation services,"
the Internal Revenue Service said. "They attract new clients by promising
large refunds."
The Justice Department and IRS recently released a list of tax preparers
prosecuted for submitting fraudulent tax returns that included false claims
for tax refunds, credits and deductions.
"The IRS Criminal Investigation Division has vigorously pursued
unscrupulous tax return preparers in recent years," said Andrea D. Whelan,
special agent in charge of the Dallas field office of the IRS Criminal
Investigation Division. "Many of these cases resulted in hefty prison
sentences, which are an indicator of the seriousness of return preparer
fraud."
To crack down on rogue tax preparers, the IRS last year launched an
unprecedented effort to provide some oversight over the industry, including
more than 87,000 preparers in Texas. Among other things, the IRS now requires
tax preparers to register with the agency and obtain a new or renewed Preparer
Tax Identification Number, which previously was optional.
Other rules include:
Starting in the summer, the IRS will require certain paid tax preparers
to pass a competency test. Certified public accountants, attorneys and
enrolled agents (federally authorized tax practitioners) will be exempt from
this exam because their professional requirements also include testing.
The IRS will require certain paid tax preparers to take 15 hours of
continuing education courses annually. The starting date hasn't been
determined.
Again, CPAs, attorneys and enrolled agents will be exempt because their
professional requirements include continuing education.
"Our intent is not to impose onerous mandates," said IRS spokesman Clay
Sanford. "Our intent is to stop the unqualified and unscrupulous from causing
financial and emotional pain on the nation's taxpayers."
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