NC-2008-03, January 23, 2008 SC-2008-03

With the tax season now upon us, it is never too early to start thinking about choosing a tax preparer. During the tax season about 61 percent of North Carolina filers and about 65 percent of South Carolina filers will use a paid tax professional to prepare their tax returns. The Internal Revenue Service wants to offer tips for taxpayers contemplating using a tax preparer.

"The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and tax credits," said IRS spokesperson Mark Hanson. "By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts."

"Taxpayers who pay someone to do their taxes should choose a preparer wisely. If you choose to use a paid tax preparer, it is important that you find a qualified tax professional," said Hanson. "Taxpayers are ultimately responsible for everything on their return even when it's prepared by someone else. While most tax return preparers are professional and honest, taxpayers can use the following tips to choose a preparer who will offer the best service for their tax preparation needs."

• Ask about service fees. Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee results or base fees on a percentage of the amount of the refund.
• Plan Ahead. Choose a preparer you will be able to contact after the return is filed and one that will be responsive to your needs.
• Get References. Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?
• Research. Check to see if the preparer has any questionable history with the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
• Determine if the preparer's credentials meet your needs. Are they an Enrolled Agent, Certified Public Accountant, Tax Attorney or Public Accountant? Only attorneys, CPAs, Enrolled Agents and Public Accountants can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return they signed as a preparer.

• If a taxpayer suspects tax fraud or knows of an abusive return preparer, this activity should be reported using IRS Form 3949-A, Information Referral. Form 3949-A can be downloaded from the IRS Web site at IRS.gov or requested by calling 1-800-829-3676. The completed form, or a letter detailing the alleged fraudulent activity, should be sent to Internal Revenue Service, Fresno, CA 93888.