Edward Karl, vice president of taxation for the AICPA, recently released a number of tips on hiring a future CPA, noting in a statement that, “It’s important to thoroughly vet the person you select to prepare your taxes. Your tax preparer will be handling critical financial and personal information for you. Be wary about who you hire."
Karl's recommends for selecting a CPA or other tax preparer are thusly:
- Get referrals. Ask relatives, friends, neighbors, co-workers or others you trust in your community for referrals. Referrals are one of the best ways to locate a CPA.
- Verify credentials. Many CPAs specialize in taxes, but not all tax preparers are CPAs. Stringent state licensing rules – including education, examination and experience requirements – distinguish CPAs from other tax preparers. CPAs also must satisfy extensive continuing education requirements and comply with a broad code of conduct and tax ethical standards. Confirm that the CPA is currently licensed. Most state boards of accountancy have websites that allow consumers to check the status of an individual’s license.
- Check for consumer complaints. Have complaints been filed against the tax preparer? Have they been resolved to the consumer’s satisfaction? Have any lawsuits been filed?
- Interview potential tax preparers. Meet with the tax preparer. What’s their area of expertise? Find out whether the preparer has other clients with your type of tax situation, how long they’ve been in business and whether they will be there year round to serve not only your tax filing requirements, but also to help with future tax, college, retirement and business planning needs.
- Ask how they bill. They may not be able to tell you exactly how much it will cost to prepare your tax return, but they should be willing to explain the basis of their fee structure. Is it hourly or a flat rate? Can they provide you with an estimate?
- Question them about how they work. Will the tax practitioner prepare your return or will others prepare it? If others prepare it, will the practitioner review it and sign it? Do they use only internal staff or do they outsource work? Will they be available to respond to questions about the return from IRS or state officials?
- Inquire about information security processes. How do they protect their clients’ personal and financial information? How many people will see your information? Is data encrypted? How do they protect against computer network breaches?
- Do your styles match? Ask about weekend or evening hours, how soon telephone calls are returned, how they use technology and what the timetable is for completing the return.
- Confirm they have an IRS PTIN. All paid tax return preparers are required by law to have an IRS Preparer Tax Identification Number (PTIN) and to include it and their signature on the returns they prepare for clients. The PTIN number is renewed each year. Confirm that they have a PTIN using the tool on the IRS website.
- Red flags. If the preparer says they will prepare an original tax return (not an amended return) for a percentage of the refund, commonly referred to as a contingent fee, walk away. Also walk away if the tax preparer won’t provide information about their fee or how they charge. Don’t hire a preparer who promises something good without seeing your prior year’s return, who suggests taking a deduction or credit that makes you uncomfortable, who asks you to sign an incomplete or blank return or who wants your refund to be deposited into their bank account instead of yours.
For more on Karl, head to the AICPA's site here.