Choosing a Good Tax Preparer

The correct person to help you with your taxes is a very personal decision. Other than a spouse or a medical professional, the sharing of your own financial information with a professional tax preparer or financial planner is a very personal and difficult decision for most people.

Besides the skill of the individual selected, you should evaluate their personality and ethics to ensure they are in line with your own. It is much easier to have a relationship with a tax pro if they are someone you wouldn’t object to meeting in a social situation as well.

Who Should Prepare Your Taxes

If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax return preparer is primarily responsible for the overall substantive accuracy of your return and by law, is required to sign the return and include their preparer tax identification number (PTIN) on it. Although the tax return preparer always signs the return, you are ultimately responsible for the accuracy of every item reported on your return. You may want to ask friends, co-workers, or your employer for help in selecting a competent tax return preparer.

In Oregon a license is required to prepare a tax return for compensation. The state established agencies which are funded by tax dollars and are therefore primarily responsible for the protection of the taxpayer through the regulation of prepares within the state. In Oregon, three separate agencies perform this function: The Board of Accountancy, Board of Tax Practitioners, and The Oregon State Bar. If an individual is not licensed through one of these agencies they are not regulated by the continuing education and ethical requirements established by the state.

Regardless of who issues the license, all tax preparers who prepare tax returns for compensation are also required to have a Personal Taxpreparer Identification Number (PTIN) issued by the IRS.

You can determine if an individual has a PTIN here: http://irs.treasury.gov/rpo/rpo.jsf

Specifics you should check

• Ask if they are able to provide a list of references for you to call. Do they have testimonials?
• Be wary of tax return preparers who claim they can obtain larger refunds than others can.
• Avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of your refund into their financial accounts.
• Consider whether the individual or firm will be around for months or years after filing the return to answer questions about the preparation of the tax return.
• Check the person’s credentials. Only attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collections, and appeals.
• Are they available year round? How do I find you if I have a question?
• What happens if I get audited?
• How are your fees determined?

What kind of tax preparer do you need?

You should call and speak with a potential tax preparer to learn their specific type of licensure and any particular area of expertise. Get a feel for them. Do they have knowledge of your specific situation? Are they discussing things that you are familiar with? Are they asking you challenging questions that may demonstrate their knowledge? Are they connecting with you? Are they asking questions to validate they understand the information you have provided them?

There are multiple types of licensure within Oregon. Each has an implied level of competence, however, it should be recognized that an individual with the lowest level of licensing could be considerably more knowledgeable in many areas than an individual that is deemed to have a higher level of training and knowledge.

At the top of the list are Lawyers, Certified Public Accountants and Enrolled Agents. Generally, preparers with these credentials are college educated and are provided the privilege of unlimited representation rights before the courts and government agencies. They are deemed to have the highest level of knowledge of tax law. Lawyers and Certified Public Accountants are regulated by state boards. They can practice in multiple states by applying for reciprocal licensure. Enrolled Agents are regulated by the Department of the Treasury. This is a nationally recognized credential with no reciprocal licensing needed at the state level.

In Oregon, Certified Public Accountants are licensed by the Oregon Board of Accountancy and lawyers are licensed by the Oregon State Bar. All other tax preparers are licensed by the Oregon Board of Tax Practitioners. The Oregon Board of Tax Practitioners issues two types of licenses:

Licensed Tax Consultant: A tax consultant is considered to be at an experienced level for preparing personal income taxes, and can work on their own. To obtain the consultant credential, you must be at least 18 years of age and have either a high school diploma or GED and pass a state level examination. Prior to sitting for the exam an individual must have worked at least 1100 hours preparing personal income tax returns within two of the last five years. To maintain licensure, 30 hours of continuing education are mandated annually, two of which must be related to ethics. (The 1100 hour work requirement is waived for those possessing the Enrolled Agent credential)

Licensed Tax Preparer: will have satisfactorily completed an approved 80 hour basic tax course and passed the state level examination. Licensed Tax Preparers must work under the supervision of a Licensed Tax Consultant, Certified Public Accountant, or Lawyer. A tax preparer is considered an apprenticeship level for preparing personal income taxes. To maintain licensure, 30 hours of continuing education are mandated annually, two of which must be related to ethics.