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Choosing a tax preparer: start by checking credentials

A new tax filing season is only a few weeks ago. If you don't have a tax preparer to assist you, it's time to consider your options.

To be sure, you don't have to use a paid preparer. You could purchase software to do your taxes yourself. There are even brave souls who do their taxes the old-fashioned way, using calculators and other low-tech tools.

But if you are the type of taxpayer who prefers to use a professional preparer, now is the time to make sure you have one in place. In this post, we will discuss some of the things to keep in mind as you seek and select someone to work with.

Above all, it's important to check the credentials of the tax preparer you are considering. But how do you do that?

The IRS does not have all the answers, but it's a good place to start. This is because the IRS has broad, regulatory authority over paid tax preparers.

This authority is certainly not unlimited. A reminder of these limits came when a federal appeals court struck down an effort by the IRS to impose competency testing and continuing education requirements on all tax preparers. In a post in May of last year, we noted that the IRS decided not to appeal that ruling to the U.S. Supreme Court.

But the IRS still oversees various requirements that paid tax preparers must comply with. For one thing, all paid preparers must have a Preparer Tax Identification Number (PTIN). The IRS has developed a directory of tax return preparers, which taxpayers can use to search for a preparer based on location and qualifications.

There are several different statuses of return preparers, including CPAs, enrolled agents, attorneys and others.

So let's say you've verified that the preparer you are considering has a PTIN. Another step you can take is to check on whether the preparer has a history of complaints or disciplinary actions. If the preparer is licensed, such as a CPA or an attorney, you could check with the relevant professional organization (state accounting board or bar association). For enrolled agents, you can check the IRS website.

Of course, not all paid tax preparers are licensed. But even for preparers who are not licensed, you can still check with the Better Business Bureau in your area about whether there have been complaints against the preparer you are considering.

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