 Internal revenue service RRS tax news. RRS reminds taxpayers choose a tax professional carefully. That's right. Choose the tax preparer wisely and be nice to them because if you choose poorly... It certainly is the cup of the king of kings. Eternal life. You don't even want to know what the iris will do to you. That's the video I send out every time someone complains about my fees and I'm pretty sure the government made that gaudy anti-holy grail cup with our tax dollars and then stored it away in some kind of top secret location. However somehow they recently found it in Joe Biden's garage as a paperweight on top of some top secret documents revealing that JFK was actually killed by some kind of crazy progressive academic deconstructivist pedophile which is why they had to cover it up of course you know because you know they they don't want to cause any kind of harm or commit any kind of inadvertent microaggression against the crazy progressive academic deconstructivist pedophile community by prosecuting someone that just happened to be a part of it you know and doing that just because why because some president got shot that wouldn't be right. Anyways luckily we've been assured that having the top secret anti-holy grail misplaced and used as a paperweight on top of some of the most sensitive documents in US history is a totally common occurrence. It's just normal document sorting error that happens all the time. I mean this stuff is totally taken seriously. There's nothing to see here. There's no there there. I think you're going to find there's nothing there. I have no regrets. Unless you count like the top secret stuff as like a there which is located you know over there in the corner of Joe Biden's garage holding down the top secret documents which have some strange circular rings burnt into the top of them almost like somebody rested the bull of their crack pipe on top of the top secret documents using the documents of some kind of coaster so as not to burn the coffee table with their crack pipe but still even if there is a there there these aren't the there's you're looking for. Let me see your identification. You don't need to see his identification. We don't need to see his identification. These aren't the droids you're looking for. These aren't the droids we're looking for. Move along. I are 2023-13 January 24, 2023 Washington. The internal revenue service today reminded taxpayers to choose a tax return preparer with care even though most tax return preparers provide honest quality service. Some may cause harm through fraud identity theft and other schemes. So let me just give you my overall recap on the tax return preparation and the help with it. I would think that most of the time these days most people don't want to prepare the tax return by hand because even with the simple tax return or low income tax returns they are becoming quite complex due to the refundable credits. It used to be at one time you would say hey if my income's below a certain threshold maybe I don't even file a tax return but even then you can't really answer that question definitively because of the refundable credits. You might get a refundable credit. The refundable credits are quite complex to calculate those being like the earned income tax credit and the child tax credits and so at the least you would probably want tax software. That's where you might be using the free filing software to help out because that gives you kind of an interview process to give you a little bit more assurance that you're going through the information properly and picking up the available credits if they're available and entering the data properly. Now if you get above a certain threshold in terms of income then you not only have the needs of preparing the tax return for the current year which might be complex in and of itself to the point where you might actually want advice for doing that but you're also in a situation where you have different cash flows and you might have questions about business questions and other kind of things that would be relevant to tax planning. So when you have a tax planning situation and you're not just trying to to prepare the tax return lower income situations oftentimes there's not as much tax planning we can do even though because there's not as much income flexibility and so on but even but even still the tax returns are somewhat complex and therefore you probably want to at least use the software as the money gets larger or more income then there might be more strategies that can be taking place with regards to it and then you probably want to be hiring someone that can help you with future tax planning not just the current need of preparing the tax return in the current year and then of course the types of people that you might want to help with that will differ depending on your particular situation. Some kind of some tax preparers are specialized more on individual taxes some are specialized more on larger income situation tax returns some have more experience with business related things in terms of a sole proprietorship or different entities like a partnership or a corporation and that kind of stuff so maybe we'll dive into that a little bit more as we read through here. So when hiring an individual or firm to prepare a tax return filers need to understand who they're choosing and what important questions to ask a taxpayers needs will determine which kind of preparer is best for them whether taxpayers regularly use a tax professional to help them file a tax return or have decided to work with one for the first time choosing a tax professional carefully is important taxpayers are ultimately responsible for all of the information on their income tax return regardless of who repair prepares them. So you might think hey and this is the common kind of thing because the system is kind of set up so that everything is automatically done so it kind of seems like you're not the one that's responsible for anything right because it's like well the the employer is the one that's responsible for withholding my money from the paycheck even though you're the one that gives them the w4 and so on but it kind of seems like well they're kind of doing that and then they're responsible to give me the w2 which they gave to the government so I really have no control over that it's basically automatic the government can make the tax return themselves and if I hire a tax preparer or even if I use the software you're kind of thinking you might get a mindset of thinking well that's now it's on the tax preparer it's not my responsibility but it is ultimately your responsibility still even though everything's kind of automatic so when you hire a tax preparer you're hiring them in essence as your agent they're doing work on your behalf and if there's an error in it then you're going to be primarily responsible so you would like to hire someone that can help you out so in other words if someone's saying hey I'm going to get you a massive refund and they do the tax return to get you a massive refund and they did you know things that they shouldn't have positions they shouldn't have taken to do that it's what if the tax preparer just disappears next year right then that's more of a scam situation right because now they're trying to sell their services based on getting a massive refund instead of doing the tax return properly and it's our job as you know the taxpayers to weed out that that kind of scenario that kind of scammy kind of stuff you're looking for someone who has a long-term reputation of doing taxes for a long period of time or something like that because because that's the difference between a business and a scam it's not just making money in the short run people that are making money in the short run that are going to go that are going out of business or leaving town when they when it finds out that what they're providing is not good then you have a problem it's like the Disney corporations right now and so on you know people are finding out that the stuff they're making isn't good it's almost like a scam they're feeding off of their good will their good name and in the long run not a good strategy same thing with the with the tax return preparation if someone's trying to get business based on giving massive returns at some point there's going to be problems because when the audit happens in the future to the clients then they're not going to be able to to withstand the positions and hold them up and then you've got everything hits the fan but in any case when choosing a tax professional the IRS urges taxpayers to visit irs.gov there's a link to that here the choosing a tax professional page there's a link to that has information about tax return preparer credentials and qualifications there's a link to that here the irs directory of federal tax return preparers with credentials and selected qualifications there's a link to that can help identify many preparers by type of credential and qualifications so if you're dealing with someone you know there's tax preparers and and there's people that have CPAs and stuff and so the question is and there's enrolled agents so you probably if you're looking at an enrolled agent oftentimes you're looking at someone that specializes in tax preparation individual tax preparation oftentimes a CPA firm is is is usually something that's that's good CPAs have to go through a lot of like business kind of stuff in terms of accounting kind of stuff so if you have business related stuff oftentimes they're good to help out with with that so proprietors LLCs and so on if you get a lawyer that's that actually does tax preparation they're usually going to be more expensive and are usually more specialized in particular areas possibly setting up things like us partnerships and and LLCs and S corporations you want to be careful though with someone that's really specialized because obviously the advice they're going to give you is that you should do the thing that they're specialized in right so it's kind of one of the downfalls of being hyper specialized and trying to get advice from someone who I mean if you get advice from someone who makes all their money by setting up S corporations it's not surprising that they're going to try to convince you to set up an S corporation or an LLC or something like that not to say that that's wrong advice is just to say that it it's you know that's what they do so it's not really you know they're going to get paid for okay in any case warning signs by law anyone who's paid to prepare or assist in preparing federal tax returns must have a valid preparer identity tax identification number there's a link to that here paid preparers must sign and include their PTI in on any tax return they prepare now oftentimes the fact that the tax preparer does that is good because it holds them accountable to some degree so it gives you a little bit of relief but it also leads to the lens itself to this idea that the tax preparer is the one that's responsible as if they're the representative of the IRS or something and you're going through an audit by by giving your information to the tax preparer that's not the case you know the tax you're still responsible for the tax return even though the IRS is collecting the information by the paid preparer as well and they can you know run into troubles if they don't put that information on the tax return so if they don't put their identification number on the return and you're paying them that's a flag that something doesn't look right so not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund taxpayers should avoid these unethical ghost tax return preparers now remember and and this people often think well that's the like you hear people arguing well that's the the dangers of the capitalistic market and this is with these people but this isn't really that's not really a business when people are doing this just want to point that out that's that's a scam right the business is the guy that's going to be there or gal or whoever's doing the tax preparer the tax preparing for a long term period trying to make money over a long period of time if the goal of your quote business end quote is to make money for like four months and then leave town that's not a business that's a scam so a ghost preparer is someone who doesn't sign tax returns they prepare unscrupulous ghost preparers often print the return and have the taxpayers sign and mail it to the IRS for electronically filed returns a ghost preparer will prepare the tax return but refuse to digitally sign it as the paid preparer it's like why won't you sign it then if you're if i'm paying you and you're the paid preparer because they don't want the iris tracking them that's a bad sign tips for selecting a tax return preparer here are a few tips to consider when choosing a tax return preparer look for a preparer who's available year round if questions come up about tax return taxpayers may need to contact the preparer after the filing season is over so if there's like some new tax preparer rolls into town and has all these good promises of getting you massive refunds then you know they might sell you some snake oil while you're here too you know that doesn't sound good you want them to be there like like when you get when you get up when you run into a problem that would be nice if if if that could be the case so review the preparer's history check the better business bureau there's a link to that here website for information about the preparer look for disciplinary actions and the license status for credentialed preparers for CPAs checks the state board of accountancies website and for attorneys check with the state bar association for enrolled agents go to verify the status of an enrolled agent or check the irs directory of federal tax return preparers so there's a lot of different credentials they just you know went over here you've got you've got the the the lawyers you've got the california board the the CPAs and the enrolled agents and they all have their own kind of organizations that you can check to verify and again to choosing between them which one of those should I choose from if i'm looking for you would think the enrolled agents usually are there's a little bit less less that you need to get in that license so it might be a little bit cheaper oftentimes but it depends on the experience of the enrolled agent and again you would think they would be more focused on individual tax returns not so good with like bookkeeping needs if you have a business situation and whatnot and possibly some accounting work needs to be happening or business strategies that deal with setting up stuff that has to do with businesses then the CPA oftentimes they're good in that area and again attorneys are usually specialized in a particular area they're usually more highly specialized and more highly paid for a particular area so they're more expensive oftentimes because of that specialization but you want to be careful on the specialization like i said before so ask about service fees taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer a deposit all or part of the refund into their own financial accounts so if they're saying hey we're going to deposit some of your refund into our account that's not how it's supposed to go so be wary of tax return prepareers who claim they can get larger refunds than their competitors so if someone's basing their entire pitch that i get better refunds than anyone else is that because they're smarter than anyone else or because they're doing you know you have to you have to you have to think that they've got to be taking very more extreme positions and just the fact that they take more extreme positions and you get the refund within 21 days or whatever doesn't mean that you're not going to get audited because there's a three-year window that you kiss you got it you're going to sit you're going to be nervous for you should be nervous at least for three you may not be maybe nothing but you you should be nervous for at least three years because then the even if even if someone did extreme positions because you could get audited within that time frame so again you would think that that's a that's a red flag if someone's saying that so ensure the preparer offers irse file the irse issues most refunds and fewer than 21 days for taxpayers who file electronically and choose direct deposit provide records and receipts good preparers ask to see the documents they'll also ask questions to determine the client's total income deductions tax credits and other items so so you you know if if they if you just give them the numbers and they don't want the documentation you know that they're not that might happen you know and they might not have all you mean they're gonna depend on you for the information but generally they you would think you'd want the documentation to support and you don't want a situation where they're taking extreme positions and ignoring the documentation so that they can say well I didn't know the documentation is different than what I actually put on on the return right they can't they because if you give them the documentation and they put something different than the documentation on the tax return now they've they've had intention or you know at least they have to explain why they put something on there different than what's on the documentation and that so do not hire a prepare her who e-files a tax return using a pay stub instead of a w2 form this against is against irse file rules understand the preparers credentials and qualifications attorneys cpa's and enrolled agents can represent any client before the irs in any situation annual filing season program participants may represent taxpayers in limited situations if they prepare and sign the tax return meaning if you have a problem and the irs comes back and basically is arguing a position that you took or something like that on the tax return then you might want to have someone represent you in a similar way as a lawyer might do in a situation of a crime instead of going to court oftentimes you can have your representative go there so you're not sitting there all day and the lawyer also often has more ability to talk to the court on your behalf you got similar things with attorneys and cpa's and enrolled agents when you're dealing with the irs you can you can possibly give them a power of attorney and allow them to make decisions on your behalf in that case so that can be something to keep in mind you may not hopefully you don't need that but it would be nice to have in the event that the irs comes back with some weird position or something never sign a blank or incomplete return taxpayers are responsible for filing a complete and corrected tax return so review the tax return before signing it be sure to ask questions if something is not clear or appears inaccurate so most people when they hear that they're like how can i possibly review it because it's the tax code is quite complicated that's why i hired someone and that's the problem so you are somewhat dependent on the person that you hired because the tax return code is complicated that's why you need someone to hire but that's why you want to make sure to hire someone you could trust and still look over the tax return and a good tax preparer will will usually be able to break down what they're doing in such a way that you can understand it so that you can be comfortable sending in what you're sending in so any refund should go directly to the taxpayer not into the preparer's bank account review the routing and bank account numbers on the completed return and make sure it's accurate taxpayers can report preparer misconduct to the irs using form 14 157 complaint tax return preparer there's a link to that here if a tax if a taxpayer suspects a tax return preparer filed or changed their tax return without their consent they should file form 14 157 a tax return preparer fraud or miscontact f conduct affidavit there's a link to that here so more information below at the links choosing a tax professional tax time guide and there's a publication 17 for federal income tax for individuals there's links to all that stuff here those links to this and the description