Tax Return Preparer
Now that you have the “tax season blues“, it is time to prepare your tax return and pay the piper (the IRS). Most companies use a paid tax return preparer to prepare and file taxes. In 2009 the IRS conducted a review and estimated there are between 900,000 and 1.2 million paid tax return preparers in the US. How can you tell if you have an honest preparer and why does it matter?
If you go the IRS webpage and search for “tax preparer fraud”, you will find over 350 IRS documents dealing with tax preparer fraud. Many of them report fines and jail sentences imposed on fraudulent tax preparers and tax payers who trusted these fraudulent preparers. The IRS is serious about tax fraud and is cracking down on third party tax preparers. If the IRS suspects a preparer of fraudulent activities, they will audit all of the preparer’s clients. In addition to the hassle of an audit, if the IRS finds any inconsistencies in your returns, you are facing fines, penalties and additional taxes. It is imperative that you select your preparer carefully.
This has become such a large problem, the IRS has proposed that starting next year all preparers that do not hold a professional designation, will need to be registered with the IRS. Preparers would need to register with the IRS, pass a competency exam, and complete 15 hours annually of continuing education classes. They would also need to comply with the IRS Ethical Standards to continue to be registered as a paid tax preparer.
When selecting a preparer, be suspicious of anyone that claims they can obtain a larger refund than others or those who base their fees on a percentage of the refund. Look around for a tax professional that is established and will be there in the future to help you resolve any issues. The last thing you need to add to the tax season blues is to be audited because you used a fly by night preparer.
If you have a good brokerage software system, like TruckMaster’s Freight Brokerage Solution, preparing your taxes is much simpler. You can print out an income statement and trial balance from the accounting system which will make preparing your tax return fast and accurate. Then you can easily check your preparer’s figures against your actual income and expenses in the general ledger.
It may be too late this year to streamline your tax preparation procedures, but act now to make next year less painful and time consuming.
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