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Choose Tax Preparer With Vigilance

Released: March 28, 2007

FTB and IRS’ New Publication Provides Tips on How to Select a Tax Professional

More than 65 percent of California taxpayers use professionals to prepare and e-file their tax returns. If you want to hire someone to prepare your tax return, be sure it is with someone you know or you can trust.

“Taxpayers are the ones held responsible for errors made on their tax returns, whether they are careless mistakes or deliberate misstatements made by a tax preparer,” said State Controller and FTB Chair John Chiang. “To avoid being left holding the bag, taxpayers should make sure they are dealing with honest, qualified, and professional tax preparers.”

Most preparers are honest and provide a valuable service to the millions of taxpayers who depend on them. However, dishonest tax preparers can manipulate tax return figures in many ways. Preparers can inflate expenses and deductions, claim unallowable credits, or take excessive exemptions on returns prepared for their clients. These activities can cause taxpayers considerable problems because it is the taxpayer who is ultimately responsible for the accuracy of the tax return information. The IRS and FTB have recently issued a brochure, FTB Publication 982, How to Select an Income Tax Return Preparer where taxpayers can learn more about choosing a tax professional.

Some common signs a tax preparer may be abusive include:

  • Claiming they can get bigger refunds than other tax preparers. Someone unfamiliar with your financial situation cannot make such a guarantee.
  • Basing their fee on a percentage of the refund amount rather than the complexity of the tax return.
  • Refusing to sign the tax return as the paid preparer or not providing a copy for the taxpayer’s records. The preparer is required by law to sign the return.
  • The preparer is not properly licensed or registered.

Under California law, preparers must be licensed or registered to prepare income taxes for a fee. If they are not, they are preparing returns illegally. CPAs, Public Accountants, Enrolled Agents, and attorneys are licensed by either the state or federal government and may charge a tax preparation fee. All other tax preparers who charge a fee for their services must be registered with the California Tax Education Council. CTEC is a nonprofit organization established in 1997 by the Legislature to protect the public and promote competent tax preparation. Taxpayers should always review their return for accuracy before signing it.

If you are thinking about using a tax professional, be sure to consult the following organizations:

  • CPAs and Public Accountants are licensed by the California Board of Accountancy. To locate a CPA, contact the California Society of Certified Public Accountants at (800) 922-5272 or visit www.calcpa.org.
  • Enrolled Agents are licensed by the federal government. To locate one near you, contact the California Society of Enrolled Agents at (800) 829-7765 or visit www.csea.org.
  • California Tax Education Council registered tax preparers can be found by calling (877) 850-2832 or visiting www.ctec.org.