Choosing a Tax Preparer

Tax Season is officially here!  You can now file electronically starting 1/19/2017.  To file your taxes you will want a competent, trained, and knowledgeable tax preparer.  How can you be sure the tax preparer you’ve selected is the right one?

ANYBODY can be a tax preparer.  All a person needs is a Preparer Tax Identification Number (PTIN) from the IRS.  Scary, right?  Once you have all the information on what to ask your possible tax preparer, and the tools to check their credentials you will feel comfortable and confident in your decision.  There are generally three tax professionals you want to choose from during tax time,   Enrolled Agents, AFSP Participants, and Certified Public Accountants.

Enrolled Agents are tax experts.  They are federally licensed tax practitioners.  Tax season is time for enrolled agents to shine.  Taxes are what they do!  They have been extensively trained and are extremely well versed in tax preparation.  Being an enrolled agent also entitles that person to be able to represent taxpayers in an unlimited fashion.

An AFSP Participant is a little more educated than Joe Schmoe who ran and got a PTIN from the IRS.  Joe Schmoe applied for a PTIN, and the IRS gave it to him.  An AFSP (Annual Filing Season Program) Participant is required to complete 18 hours of IRS approved continuing education EVERY year and have an active PTIN.  The IRS is also granting an AFSP Participant with the right to represent their clients in a limited fashion.  If the tax return was prepared and signed by the AFSP Participant, they may talk with the IRS about that specific return on behalf of their client.  As of 12/31/2015 if the tax preparer ONLY has a PTIN, they may NOT represent you in any fashion to the IRS.

A Certified Public Accountant (CPA) may also be a tax expert.  Or they may know nothing about tax preparation.  CPA’s are trained extensively in an area of their choosing.  Whether it be financial planning, monthly accounting, or taxes.  It depends on the CPA’s area of expertise.  Perhaps they have chosen taxes as their area of expertise, then by all means use them to prepare your taxes.  Be thorough and check first, don’t be fooled by those three prestigious letters!  A helpful link is available through the IRS website.  Choose a Tax Preparer Wisely.

Another point to consider in choosing your tax preparer is the representation that will be available to you if the need arises.  There is limited and unlimited representation.  Unlimited representation sounds exactly like what it is.  They are unlimited in the capacity they can represent you to the IRS.  Enrolled agents, Certified Public Accountants, and Attorneys’ all have the ability to perform unlimited representation.  Limited representation is when the tax preparer may represent you if and ONLY if they prepared and signed the tax return.   These are the AFSP Participants.  They may not represent you to the IRS for arrears, or a financial agreement, or anything other than the tax return they prepared and signed.  Seems like a no brainer that everybody would want to have access to a tax preparer that would be able to represent them in an unlimited fashion!  Below is a handy chart to check what kind of representation would be available to you depending on which tax preparer you choose to go with this tax season.

PTIN Holder AFSP Participant Enrolled Agent CPA
Provide Missing Info. YES YES YES YES
Call About Processing YES YES YES YES
Receive notices/copies YES YES YES YES
Respond about math errors/preparation YES YES YES YES
Argue tax law NO YES YES YES
Disagree with IRS on a return (s)he prepared NO YES YES YES
Talk with IRS in an audit on return (s)he prepared NO YES YES YES
Handle Appeals NO NO YES YES
Talk with IRS Collections Officer NO NO YES YES
Talk with IRS in an audit ANYONE prepared NO NO YES YES
Disagree with IRS on a tax return ANYONE prepared NO NO YES YES

 

Any tax questions, or to schedule a tax appointment please call Padgett Business Services at (845) 834-4206, or email us at Shawn@HVTaxPros.com.