Everyone should first verify the credentials of a tax preparer. While not necessarily a talisman that can protect a taxpayer from unscrupulous preparers, it’s important for individuals to hire someone of competence, particularly for complicated returns. Some things to consider include if the tax return preparer a CPA and registered with a state agency. Also, find out if they perform similar types of returns on a regular basis.
Second, ask questions of the preparer. At the end of the day, the taxpayer owns the responsibility for the return, not the preparer. Don’t hesitate to push back on the important issues on a return, and get the answers you need to feel comfortable about it.
Make sure you also receive copies of the returns. It would surprise many, but unscrupulous tax return preparers — the same ones that are likely to pull a taxpayer into bigger problems — don’t share their work as often. So if you encounter a return preparer that’s not overly willing to give you a copy of the return, it might signal that you need to select someone else.
We also would suggest in the selection process be cautious of some of these things like extraordinary, unusual or unexplainable refunds, credits, and other things that look uncharacteristic from your prior experience. Granted, a taxpayer may select a new return preparer because the previous person didn’t find all the entitled deductions or credits. But unexplainable wild swings can signal a problem to avoid.
Also stay away from unique or strange fee arrangements. Do not enter into engagements where the return prepare either does something on a contingency basis. That carries an inevitable conflict of interest in which they have a financial motivation to not just be aggressive, but to break the law. Similarly, other unique fee structures like money back guarantees for something other than the accuracy of the return, such as the positions on the return being sustained. Be cautious about refunds, refund splitting and moving money that the taxpayer’s legally entitled to to some type of account or other type of financial product that they don’t have complete dominion or control over.