Finding the right tax preparer


Q. Your recently explained the categories of tax preparers. My question is how to select the right one for me?
— Working guy

A. Choosing the wrong tax preparer could cost you thousands of dollars over time.

Each taxpayer has different needs, so the complexity of your return counts a lot here.

Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown, said there are three questions you must ask prospective tax preparers:

1. Will you be available all twelve months of the year if I have questions about past tax returns or future tax periods?
2. Have you in the past represented clients in the event they were audited by the federal or state tax authorities? Will you assist or represent me in the event I am audited?
3. Do you have expertise in the areas I need help with?

Kiely said some tax preparers set up shop in February and close down in April when tax season is over.

“They may be retired or have a full-time job in an unrelated field,” he said. “You want to be sure your tax preparer is available to answer any questions that may come up during the year.”

When a tax preparer prepares an income tax return, the job is not completely over.

Generally, the taxing authorities have three years from the date your return was filed in which to audit your tax return, Kiely said. Additionally, you have the same three years in which to amend your tax return.

You want to be sure your tax return preparer has the expertise and willingness to represent you at an audit, Kiely said.

He said income tax preparers are not created equally.

“Most of us specialize in certain areas and avoid others,” he said. “So you have to ask if the preparer is qualified to deal with the issues you need help with.”

Kiely said he has CPAs and attorneys as income tax clients.

“Just because they passed the bar or CPA exam doesn’t mean they are qualified to give tax advice,” he said.

Kiely said it’s common for new clients to hire him because they have had problems with past tax returns dealing with complicated issues such as stock options or restricted stock, trusts or estates, self-employment issues, divorce or the sale of capital assets.

He calls many tax preparers “clueless” in those areas, so he recommends you hire someone with specific expertise if you have a complex tax issue.

“If you exercise statutory stock options for the first time and your tax preparer usually works with blue collar workers, they may not understand the cost basis issues or the Alternative Minimum Tax issues of stock options or restricted stock,” he said. “You have to ask.”

Also keep in mind that tax attorneys, CPAs and enrolled agents have had training in taxes and have annual continuing education requirements.

Then there are registered tax return preparers who are just that – registered with the IRS and nothing more, Kiely said.

“At one time the IRS proposed rules that would require registered tax return preparers be tested and to have annual continuing education requirements,” he said. “The courts ruled that the IRS was acting outside their statutory authority. So for now, registered tax preparers have no educational requirements.”

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