J. William Seabrooke CPA P.C.

A similar article on this same subject  dated January 11, 2010 can be found on this website.  The information provided below is an update of that information and also includes new considerations. 

The selection of a tax preparer is probably one of the most important decisions that any tax payer will make. In terms of importance, it ranks on par with the choice of your family physician, your attorney,  and your financial advisors.  Although the percentages will vary by media source, generally speaking, over 80% of  American taxpayers will obtain some level of  tax return preparation assistance this year.   The existing tax laws that have emerged from the U.S. Congress in the past three decades have caused significant complications in the ability of the American taxpayer to comprehend and interpret the provisions of the tax laws that are applicable in their specific cases.  Simply stated, if you can’t understand the tax laws, don’t be concerned.  There are millions of other Americans who have reached the same conclusion.  Not only is it a formidable task for you, it’s also a challenge for tax preparers.  Remaining abreast of all of these changes/updates has become almost a full-time task for me.  In a nutshell, if you have any doubts whatsoever regarding the accuracy and completeness of your tax return, including all of the data on every line of each form,  I  recommend that you contact a tax professional for assistance.  Potential sources for this assistance include a Certified Public Accountant, a tax attorney (who usually is also a CPA), the Internal Revenue Service (http://www.irs.gov or 1-(800) 829-1040), a knowledgeable business associate, colleague, or family member, etc.

Additional factors that should be considered include, but are not limited to:

• An “Engagement Letter” -  a formal, written document that is signed by all of the parties.  This document will include many very important aspects of your relationship and  the work products that are to be provided throughout the “engagement”, especially all of the specific reponsibilities for you and for the tax preparer.  The documents will also include 1) the “scope of the engagement” (what tasks you want the preparer to accomplish and the final work products), 2) deadlines and fee structures including billings and payments, 3) communications with you (e-mail, letter, FAX etc), 4)  timing of the engagement, 5) the costs for additional services including the preparer’s terms and conditions, 6) the preparer’s practices and policies that will be provided for the protection and disclosure of your confidential tax return information.  Most malpractice insurers will not honor claims from a practitioner who does not use “engagement letters.”   
• Practitioner Tax Identification Numbers (PTIN) – in August 2010 the Internal Revenue Service implemented a new requirement that all tax preparers register with the service, obtain a PTIN, and renew their account annually.  During the annual renewal process the IRS reviews the tax preparer’s history, compliance with all of the appropriate laws, violations, suspensions, etc.  The following is an abstract from The Journal of Accountancy on this subject “All paid tax return preparers, including CPAs, now must use a PTIN when signing all tax returns, forms or claims for refund (except for certain specified returns and forms—see Notice 2011-6), and must have obtained or renewed an existing PTIN to prepare returns after Dec. 31, 2010. In addition, persons who exercise discretion or independent judgment to prepare all or substantially all of a tax return, form or claim for refund (again, apart from certain specified ones) must likewise obtain or renew a PTIN, whether or not they sign the return, form or claim for refund. The PTIN requirement is part of the IRS’ broader effort to establish minimum standards for all paid tax preparers that will eventually include, for preparers who are not CPAs, attorneys or enrolled agents, testing and continuing education.”
• Qualifications-carefully review the qualications of everyone who provdes any tax assistance to you.  This includes references, qualifications, experience, certifications, etc.
• E-file-the technology is here now.  Use it to your advantage.  You will also receive your tax refund sooner, even if you don’t use direct deposit.  Welcome to the 21st century!
• Communications and accessibility – obtain an agreement with your tax preparer during your initial meeting regarding the best method to communicate with you (Tweet, e-mail, cell phone, text message, FAX, “snail mail” etc), the best time to do so, and the responsiveness “standard” for all of your inquiries, dialogue, and communications.  A “24-48 hour turnaround” is an excellent standard to follow. In the past 32 years, one of the top complaints that new clients share with me is the failure of their tax preparer to communicate with them in a timely manner;
• Your Tax Records-all of these documents are considered to be owned by you.  Your tax preparer should make copies for his/her files and promptly return your records to you, even if there are on-going disputes between the parties;     
•  Even though you have someone else prepare your tax return, you remain fully liable for the accruracy, completeness, and timely filing  of your tax return;

 The IRS has just recently provided eight tips that are also beneficial in the decision-making process;    Here are the the IRS recommendations: (more…)

The selection of a tax preparer is probably one of the most important decisions that any tax payer will make.  I recently read an article that stated that over 80% of Americans will obtain some level of  tax return preparation assistance.  As I review the plethora of tax law changes that have emerged in 2008-2009  from both the U.S. Congress and President Obama’s administration it is obvious to me that the comprehension and interpretation of all of these changes is a monumental, formidable task not just for tax payers, but also for tax preparers.  Remaining abreast of all of these changes/updates has become a full-time task for me.  In a nutshell, unless you have a very simple, uncomplicated tax return, I  recommend that you do not prepare your own tax return without some level of assistance from a professional tax preparer.

Your tax preparer is also just as important as the person whom you select for your legal affairs (attorney) and your investments (financial advisor).  I continue to believe  that the choice is equally as important as choosing  your family physician.  Additionally, the Internal Revenue Service is now implementing new, higher standards for  anyone who prepares a tax return for someone else.  These policies  will mandate that any tax preparer must first attain, and then continue to maintain, his or her compliance with many stringent professional standards.

The IRS has just recently provided eight tips that are beneficial in the decision-making process.  I would like to add a very important  ninth tip – do not allow any one to prepare your tax return unless they provide you with a formal, written “engagement letter” that has been signed by everyone.  This document will include many very important aspects of your relationship (the “engagement”), especially all of the separate, specific reponsibilities for you and the tax preparer.  Even though you have someone else prepare your tax return, you remain fully liable for the accruracy, completeness, and timely filing  of your tax return.   Here are the the IRS recommendations: (more…)