Tuesday, January 15, 2013
CHOOSING A TAX PREPARER
Rather than repeat my annual post on CHOOSING A TAX PREPARER, let me summarize.
(1) You really should not use a “fast food” tax preparation chain, like Henry and Richard, to prepare your tax return. Fast food tax preparation chains are not cheap, and they certainly do not provide the quality of service that an individual independent tax professional does.
(2) Contrary to the popular “urban tax myth” perpetuated by uninformed journalists, just because a person has the initials “CPA” after his/her name does not mean that he/she knows his arse from a hole in the ground when it comes to preparing 1040s.
Only those individuals who possess the “EA” (Enrolled Agent) or “RTRP” (Registered Tax Return Preparer) designations have demonstrated competency in 1040 preparation by taking an IRS-sponsored test, and are required to remain current in 1040 law by taking a minimum number of hours in continuing professional education (CPE) in federal income taxes each year.
An “EA” is NOT an employee, representative, or “agent” of the Internal Revenue Service. An “EA” is an independent tax professional.
While CPAs and attorneys who have registered with the IRS and received a PTIN (Preparer Tax Identification Number) are permitted to prepare 1040s for compensation, they are exempt from demonstrating any degree of competence and are exempt from having to remain current by taking CPE in federal taxation.
(3) And, of course, no tax preparation software is a substitute for knowledge of the tax code. And no tax preparation software is a substitute for the services of a trained tax professional! Garbage-in, garbage-out says it all.
As I usually end the post - it may actually be possible that the best tax preparer, at the best price, for your particular situation is either a CPA or an H+R Block, or other fast-food chain, employee. But this is only because of the education, experience, ability, temperament, and other factors that are specific to that individual preparer.