With tax season around the corner, BBB offers tips to help find preparers

FILE(Arizona's Family)
Published: Jan. 19, 2023 at 2:41 PM CST
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TOPEKA, Kan. (WIBW) - With tax season just around the corner, the Better Business Bureau has offered a few tips to help Kansans choose the right tax preparer in 2023.

In 2023, the Better Business Bureau says taxpayers are required to file their income taxes before the April 18 deadline. For many, major life changes, business ownership or simply a lack of knowledge about tax laws make finding a trustworthy preparer a good idea.

That said, the BBB indicates that not all preparers have the same level of experience and training. It has offered a few tips to find someone trustworthy with finances and sensitive personal information.

First, the Bureau noted it is important to understand the different types of preparers and their qualifications. It said only enrolled agents, certified public accountants and attorneys can represent their clients to the Internal Revenue Service on matters like audits, collection issues and appeals.

  • Enrolled Agent - The BBB said an EA is a tax preparer that has been approved by the IRS to represent taxpayers. They must either have prior qualifying employment with the IRS or pass an intensive 2-day exam on federal taxation and complete a background check. To maintain this status, they are required to complete a specified number of credit hours each year of continuing education in accounting methods and tax regulations. They may work independently or as part of a firm and specialize in specific areas of tax law.
  • Certified Public Accountants - The Bureau indicated CPAs have a college degree or equivalent in work experience. They are licensed after passing a state professional qualifying exam and are highly skilled in accounting. This makes them good candidates for complex tax planning and preparation fi they are experienced in handling tax matters and enrolled in continuing education programs that keep them apprised of the constant changes to tax laws. If returns are complex, a CPA may be the best choice, however, they will charge more than basic tax preparers.
  • Attorneys - The BBB said tax attorneys often charge the highest fees as tax preparers. For taxpayers who want to shelter part of their income legally or for those who need specialized advice on municipal bonds, estate planning and the likes, hiring a tax attorney may be a good option.
  • Non-credentialed tax preparers - There are about 700,000 people who work as non-credentialed tax preparers in the U.S. They often work part-time or only during the tax season. These preparers are required to have an active preparer tax identification number through the IRS, however, beyond that, regulating tax preparers is done at the state level. In the vast majority of states, it said anyone can prepare tax returns for others without having to take an exam, get a license or comply with other government regulations.

The Bureau also noted that an EA is a good option for taxpayers if they have a more complex tax situation. However, taxpayers should make sure their area of expertise applies to their personal situation. Fees and availability could vary, but EAs usually charge less than a CPA. They are also qualified to help with financial planning and give tips to help reduce taxes in the future.

The BBB said most tax preparers are legitimate and competent, however, taxpayers should keep in mind that without a national license requirement, they could work off their own personal research and experience. Due to this, it is important to conduct a thorough interview with the tax preparer before they are hired.

When it comes to choosing the right preparer for individual situations, the Bureau said much will depend on the complexity of the tax situation. After qualifications have been decided, it said the following tips will help choose someone trustworthy and competent:

  • Review the tax preparer’s credentials - EAs, CPAs and tax attorneys are all qualified to represent clients to the IRS on all matters. Other preparers can help with forms and basic matters, but cannot represent in the case of an audit.
  • Be wary of spectacular promises - If a tax preparer promises a larger refund than the competition, this could be a red flag. Many such prepares base their fees on the amount of your return and could be likely to use shady tactics. It is also wise to avoid preparers who offer “refund anticipation loans” as a large percentage of the return may be lost.
  • Get referrals from friends and family - One of the best ways to find a trustworthy preparer is to ask loved ones for recommendations. Once a few options are on hand, the BBB search can detail complaints.
  • Think about availability - If the IRS finds errors in your tax forms or decides to perform an audit, will the preparer be available to help with the details?
  • Ask about fees ahead of time - Before taxpayers agree to any services, they should read the contracts carefully and understand how much the tax preparer charges of their services.
  • If things do not add up, find someone else - If a tax preparer cannot verify their credentials, has a record for bad reviews or their business practices do not seem convincing - do not do business with them.

For more information or to look up a business’s credentials, click HERE.