Choosing a Reputable Tax Preparer: How to Avoid Getting in Trouble with the IRS

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 15, 2021

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When choosing a doctor or dentist, where you take your car to be repaired, or who will handle your investments, you probably pay much more attention to quality and experience than finding the cheapest option. If you don’t take the same approach to preparing your taxes, you could be asking for trouble.

Even if you pay someone to prepare your tax return, you are legally responsible for all information on the return, and for whatever amount you might owe the government. To the Internal Revenue Service, it doesn’t matter who prepared your return; if you underpay, you will be held accountable for the amount owed, plus any additional taxes, along with interest and penalties. 

Though thousands of tax preparers are certified and reliable, tax season brings out its share of unscrupulous tax preparers who usually disappear after April 15th, leaving the taxpayer to deal with any problems or questions the IRS may have. Every year, the IRS, working with the Department of Justice, investigates hundreds of questionable tax preparers. In 2009 alone, 124 of them were convicted of criminal charges and sentenced to an average of 18 months in jail.

IRS Making an Effort to Increase Accountability of Tax Preparers

The IRS is taking steps to ensure that all professional tax preparers are fully aware of their responsibilities. As a start, it sent out letters to more than 10,000 tax return preparers reminding them of their obligation to their clients and alerting them to common errors the IRS finds on tax returns, even those prepared by professionals.

The letter reminds preparers to check the eligibility of taxpayers to claim dependents, the Earned Income Tax Credit and the First Time Home Buyer Credit. It also reminds them to be sure all income has been reported, and that filing incorrect returns can lead to fines, suspension, civil injunctions, and criminal investigation.

The IRS is taking the further step of sending agents to visit tax preparers who received the letters, some of them posing as clients. The IRS has also issued new rules for paid tax preparers, though most of those rules do not take effect until the 2011 tax season.

Suggestions for Finding a Reputable Tax Preparer

Meanwhile, both the IRS and consumer groups have suggestions for locating a qualified tax preparer. One is to seek an agent enrolled through the National Association of Enrolled Agents. These agents must pass a qualifying test and meet continuing education requirements. Enrolled agents also are licensed to represent clients in front of the IRS, and must adhere to a code of ethics.

Other suggestions for finding a reputable tax preparer include making sure that the preparer will sign the return and provide a copy, checking the preparer’s fees before the return is prepared, never agreeing to sign a blank return, and checking the reputation of the preparer to be sure there is no questionable history and that other tax clients have been satisfied.

The IRS and consumer groups also advise you to avoid preparers who promise a larger refund than other preparers, base their fee on a percentage of the refund, or want you to take out a Refund Anticipation Loan, which is profitable for both the lender and the preparer, but generally unnecessary for the client.

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