This began as an entry in the weekly WHAT’S THE BUZZ – but grew into a separate individual post.
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A TAX CONSULTANT FOR ALL SEASONS provides a reminder to be wary when selecting the person that will prepare your tax return in his post “Beware of Unscrupulous Tax Preparers”.
A TAX CONSULTANT FOR ALL SEASONS provides a reminder to be wary when selecting the person that will prepare your tax return in his post “Beware of Unscrupulous Tax Preparers”.
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He points out some signs that the preparer may not be totally “kosher” -
He points out some signs that the preparer may not be totally “kosher” -
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* A tax preparer who does not sign the return and put his or her tax preparer ID on the tax form.
* A tax preparer who does not sign the return and put his or her tax preparer ID on the tax form.
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* Tax preparers that guarantee you will get a refund.
* Tax preparers that guarantee you will get a refund.
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* Tax preparers that give you deductions you do not understand (they could be giving you ones you are not eligible for).
* Tax preparers that give you deductions you do not understand (they could be giving you ones you are not eligible for).
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I would add to the list a tax preparer who charges a percentage of the refund on a current or amended return.
I would add to the list a tax preparer who charges a percentage of the refund on a current or amended return.
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The TCFAS suggests that you seek out an Enrolled Agent (which he is) or a CPA (I am neither). I agree that an Enrolled Agent is a good choice, but not always a CPA. Usually with a CPA you pay twice as much for half the service – and there is no guarantee that just because the initials “CPA” appear after one’s name he/she is a competent tax expert. There are, of course, some very competent, experienced and tax-savvy CPAs who will not charge you an arm and a leg (perhaps only an arm, or an arm and a toe).
The TCFAS suggests that you seek out an Enrolled Agent (which he is) or a CPA (I am neither). I agree that an Enrolled Agent is a good choice, but not always a CPA. Usually with a CPA you pay twice as much for half the service – and there is no guarantee that just because the initials “CPA” appear after one’s name he/she is a competent tax expert. There are, of course, some very competent, experienced and tax-savvy CPAs who will not charge you an arm and a leg (perhaps only an arm, or an arm and a toe).
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There are a lot of “questionable” preparers out there. When I did accept new clients I would always ask to see the prior two or three tax returns. Often in the past when I asked the client if he/she has similar deductions for x, y, or z, which had been claimed on the prior return, for the current year I was faced with a blank expression – as if the client had no idea what I was talking about. In most of these cases I suspect that the previous preparer pulled deductions and numbers “out of the air” because they seemed appropriate for the taxpayer’s level of income, situation or job. The taxpayer was thrilled at the refund that resulted and didn’t question anything.
There are a lot of “questionable” preparers out there. When I did accept new clients I would always ask to see the prior two or three tax returns. Often in the past when I asked the client if he/she has similar deductions for x, y, or z, which had been claimed on the prior return, for the current year I was faced with a blank expression – as if the client had no idea what I was talking about. In most of these cases I suspect that the previous preparer pulled deductions and numbers “out of the air” because they seemed appropriate for the taxpayer’s level of income, situation or job. The taxpayer was thrilled at the refund that resulted and didn’t question anything.
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I remember the famous tale from my early days as an “apprentice” about a local preparer who had done the returns for many of the town’s police officers. The preparer would take the client’s “stuff”, ask him “how much do you want back?”, and have the client sign the return in blank. He would then proceed to make up numbers so the client would get the refund that had been requested and mail it to “Sam”.
I remember the famous tale from my early days as an “apprentice” about a local preparer who had done the returns for many of the town’s police officers. The preparer would take the client’s “stuff”, ask him “how much do you want back?”, and have the client sign the return in blank. He would then proceed to make up numbers so the client would get the refund that had been requested and mail it to “Sam”.
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And the final warning – do not use the minions of Henry and Richard to prepare your return.
And the final warning – do not use the minions of Henry and Richard to prepare your return.
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TTFN
TTFN
2 comments:
Nice post Robert. I would only add that taxpayers' should beware of tax preparers who encourage you to claim employee business expenses when everything you pay is reimbursed (or reimburseable) by your employer or deductions on a schedule C when you aren't running a business.
I have had several clients who found themselves audited and subject to fraud penalties because an unscrupulous preparer tried to take non-deductible personal expenses as business expenses.
SOB, What was I doing that I missed this?
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