The Qualified Tax Preparer: What You Should Look For

Up until 2011, there was no overarching federal standard by which a tax preparer was measured. There are still only two states that impose any kind of restriction or testing at the state level. This lack of certification and regulation meant that there could be a wide gap in quality between one professional and another, yet both could bill themselves as the same within their profession. Learning how to determine a bad tax preparer from a good one is crucial to ensuring your returns are filed with as few errors as possible.

General Qualifications

The basic requirement to successfully submit returns is simple: the person needs to know what they're doing within the relevant portion of the tax code. Theoretically, anyone could have this knowledge. Especially for simple areas of code like the most basic income withholding and returns, it's not all that difficult to learn. However, people who have learned only the basics should not be handing anything complex.

In order to determine an individual's qualifications, the best thing to do is ask them how long they've been handling returns and how many hours of formal training they've had. The more experience and the more training, the more likely they're able to handle complexities. If you know your situation requires a particularly high level of experience, look at some of the forms you had to submit last year. If you expect things to be substantially similar this year, watch the tax preparer as he or she starts to organize your returns. If things look different from last year, start asking questions.

CPAs, Lawyers, And Enrolled Agents

There is a separate class of individuals that is considered to be educated above and beyond the typical tax preparer. These individuals may or may not actively prepare returns. Certified Public Accountants, or CPAs, are trained to handle a wide variety of different accounting situations. They learn tax code alongside all of these other aspects, which means that it may not be a focus. However, their experience does tend to be more broad and they generally cover a wider range of different code than a non-CPA.

Attorneys specializing in tax related law are usually considered to be experts. They have spent a long time studying the code specifically and are knowledgeable, but they rarely spend time actually preparing returns. Instead, they represent people before the IRS in disputes.

Enrolled Agents are individuals who have displayed competence in the eyes of the IRS, and thus are certified to represent taxpayers in disputes with the IRS. They are not lawyers, but they are required to take a test and carry an identification card that confirms their status. You may be able to find an EA working as a tax preparer, and if their certification is current, they may be a good option.

After The IRS Certification Program

By 2013, anyone who wishes to be a paid tax preparer must pass a basic competency test and be registered with the IRS. This legislation is not implemented yet, and so there is no current requirement. Once it goes into effect, asking to see proof of certification should be a good first step toward determining competency as you work to find a tax preparer.

Author writes about a variety of topics. If you would like to learn more about finding a tax preparer, visit http://www.libertytax.com/.