If you're in the market for a tax professional to help you with your taxes, we can help. Here are some tips to help you find a good one. First off, ask for referrals from people whose business savvy you respect. Any accountant can buy advertising, but he or she can't buy satisfied clients.
Ask for an interview. The tax professional should be willing to give you some time (at no charge) to discuss and assess your situation. At that time, ask the following questions:
- How big is your company? (You want to determine how important your business will be and avoid ending up being a little frog in a big pond.)
- What are your fees and billing policies? (Ask for an estimate.)
- Who exactly will be preparing my taxes -- you or somebody else? If I have problems or questions, do I speak with you?
- What are your continuing professional education (CPE) requirements, and how many CPE hours do you normally take each year? (If he or she exceeds the requirements, that's a good sign.)
- What research material do you use and subscribe to? (Answers such as "CCH," "Research Institute," and "BNA" are encouraging. If the answer is merely the current Federal Tax Handbook, run, don't walk, to the nearest exit. Sometimes, complicated problems arise that require deep research. You don't want your tax geek just giving it his or her best shot. Being correct is always best when dealing with the IRS.)
- If my return is audited, will you represent me before the IRS? (Your prospective tax pro should go instead of you, not with you. If the accountant sources out the audit work, think twice before signing up. If he or she insists that you also be present at an audit, think a third time.)
- Can you get the return done in a few weeks? (It's late March, after all!)
It's also critical to select someone with whom you're comfortable. You might be dealing with the best tax technician in the world, but if you aren't comfortable with the person, you will hesitate to call him or her and might not provide the information the person needs to do a good job for you.
Here are some additional insights from Fool readers:
From H. Eugene Lunsford, E.A.: "The one profession which consistently fits your requirements is the enrolled agent, a federally licensed tax practitioner, licensed to represent taxpayers before the IRS."
Jeff Holst offers the following:
I find your advice interesting, but I quite honestly feel that it might cost people money. Let me tell you a bit about myself. I consider myself to be a tax professional. I am an enrolled agent and have been a paid preparer for seven years. I work for H&R Block.
I am not an accountant. Most accountants prepare taxes as a side business. They charge extremely high fees and often demonstrate no more tax knowledge than an experienced H&R Block preparer. I cannot tell you the number of times I have had clients who wanted to electronically file their tax return (their high-priced accountant did not offer this service) and there were obvious errors in the return that kept me from being able to file the return. I have a good friend who is a CPA. She became an accountant because of her experience with tax preparation. Her biggest disappointment was learning that was not the job she would be called upon to perform.
I have seen advice (not in your article) that people should consider having their taxes done by an attorney. I think this is terrible advice. The absolute worst return I ever saw was prepared by an attorney (admittedly, a divorce attorney) where he got the filing status wrong and failed to get the client the Earned Income Credit to which the person was entitled. An attorney who specializes in tax law can be important if you end up having to go to court but has better things to do than to know how to prepare a tax return. (Frankly, those attorneys who "prepare taxes" generally do not. They gather the information and turn it over to a seasonal employee to fill out the forms.)
There is nothing wrong with going to a company like H&R Block to have your taxes done. If the return is really complex, a client may want to utilize one of our premium tax offices, which are staffed with some of our most experienced preparers. These preparers often have an area of expertise, such as corporate, partnership, trust, or international returns. Even our local tax offices have their share of experienced tax professionals. It is wise to ask for an experienced preparer if one has other than a simple return. If you are concerned about the quality of the work at H&R Block, consider that we offer a guarantee that will pay up to $4,000 in additional taxes if the IRS disagrees with the return we prepare. (There are retractions. If a client does not tell us about income or cannot prove that expenses or deductions were actually incurred, the guarantee does not apply.) I know of no lawyer, no accountant, and no other tax preparation company that offers such a guarantee!