If you have a problem with your car, you look for your neighborhood car mechanic. Their sign says some variation of “auto body” or a car part, and by the grease on their fingers, you can trust that your car is in good hands. It’s February, and you’re looking to get your income taxes completed by a professional tax preparer. You look for a business that has “tax” or “accounting” or some other professional services trademark in the name, and you know your taxes are in good, reliable hands. It works just like your car, right? Nope, not quite.
In 2009, former IRS commissioner Doug Shulman called for the IRS to root out tax preparation fraud. In 2011, the return preparer initiative began. Prior to 2011, anybody and everybody could prepare tax returns, which was increasing the problem of erroneous returns and even tax refund fraud.
For example, your car mechanic (in theory) could put a sign in his front yard that said “Auto Body Tax Services” and prepare income taxes for individuals and businesses alike. The best part- he doesn’t need to know a thing about taxes. Sometimes, the “tax professionals” didn’t know a thing about taxes. (Just imagine all the errors in those returns.) Other times, they knew enough about taxes and the IRS to scam millions of people out of their refunds.
In 2011, the IRS began forming stricter guidelines that held tax professionals to a higher standard of knowledge and responsibility. They were requiring every tax preparer to pass a competency exam and fulfill 15 hours of continuing education by the end of 2013. The sheer cost alone of the exam and education hours would deter many people from completing it, and the remainder of the non-professional tax return preparers would be eliminated simply because they wouldn’t be able to pass the exam. This regulation meant that the remaining tax preparers would be ‘deemed fit’ by the IRS, eliminating most of the fraudulent and incompetent preparers.
However, on January 22, 2013, the IRS rescinded the new registration and training rules that had been in effect. As tax rules are changing in this tumultuous environment, it is imperative that people choose a tax professional- CPA, lawyer, EA, RTRP, or other individuals with validating credentials.
So how can you avoid falling into the trap of an unprofessional professional? Ask for their credentials. Ask them where they went to school and what for, and if they passed any examination given by the IRS. If you were to walk into our office, we would be glad to show you that we have former accounting majors who passed IRS proficiency exams with a minimum of five years experience preparing your taxes. And anyone who is hesitant to supply you with that information should not be trusted.
If you want to make sure that your taxes are in the hands of professionals this year, give us a call at (570) 430-8082 to schedule a consultation or to make an appointment.