Choose A Tax Preparer Who'S Right For You. But A Word of Caution: New ‘Privilege’ Provided to Taxpayers in 1998. Doesn’t Apply When it Comes to Completing Your Tax Return

(RIVERWOODS, ILL., January 20, 1999) – Every January, millions of Americans start worrying about their taxes – and about choosing a professional tax preparer. In 1996, more than 60 million federal income tax returns were submitted by an accountant, tax attorney, enrolled agent, a retail tax service or other paid tax preparer. CCH INCORPORATED, a leading provider of tax law information and professional tax preparation software, offers these guidelines for selecting the right tax professional – along with a word of caution about a new law that affects taxpayers who hire accountants.

The ‘Privilege’ Stops at the Door During Tax Season

In 1998, Congress granted taxpayers a number of rights under a new law that affects both individual taxpayers and their accountants and enrolled agents who advise them on tax matters. Specifically, the new law extends the existing attorney-client privilege to non-attorneys authorized to practice before the IRS.

However, CCH Principal Analyst Mark Luscombe, JD, CPA, cautions taxpayers to understand the limitations of this new privilege, especially with regard to tax preparation. In short, the privilege doesn’t apply when you’re working on your tax returns.

"If you review how confidentiality has been applied in the attorney-client environment, you’ll find that the privilege probably doesn’t apply to preparation of tax returns," said Luscombe. "So, don’t assume everything you tell your accountant is considered privileged communications. It’s simply not protected under the law."

With that word of caution, CCH suggests you consider the following when trying to find the right tax preparer for you.

Beginning Your Search

  • Go with experience. Look for a tax professional who has consistent experience in tax, especially since there were more than 600 changes to the tax code last year alone.
  • Ask your friends. Ask friends whose financial situations are similar to your own if they can recommend anyone to help you.
  • Contact your state CPA, Legal or Enrolled Agent Organizations. Many state organizations have free referral services, and many of these organizations provide free assistance to low-income taxpayers who can’t afford tax preparation help.

After Identifying Prospects, Ask These Questions

  • What is the focus of your practice? Some tax professionals have specialties in areas such as small business. If you have specific concerns, make sure your tax professional is qualified to provide the special assistance you require by asking for references.
  • Are you familiar with the laws of states in which I am subject to tax? If you have financial interests in states other than where you live, make sure your tax professional is familiar with those state laws. For example, if you live in one state and work in another, selecting a tax professional with interstate knowledge is important.
  • How do you bill your clients? Before you ask your tax professional to do anything, get a good idea of how he bills and the level of detail provided. Does he charge an hourly rate or a straight fee, and how and when will you be billed? Will you be billed for his research time? Don’t forget, the fee you pay your accountant this year could be a deduction on next year’s taxes.
  • How do you characterize your professional style? Does your tax preparer take an "aggressive" approach to minimize the tax burden even if it means incurring questions from the IRS? Or, does she take a conservative path and risk paying a few extra dollars? As the client, you make the final decisions, so choose a tax professional whose approach closely matches your own philosophy.
  • If I am audited, will you represent me? Ask your potential tax professional if he would represent you if the IRS questions your filing or decides to audit you. If so, ask if he has much experience with IRS audits. While some such experience is good, too much can be a warning sign.
  • How do you keep current with the tax law? Ask the tax preparer if he uses current-year computer software to prepare returns. Also, ask if she has access to authoritative tax research services, such as CCH, should the need for in-depth research arise.
  • What do you need from me? Ask exactly what information he needs and in what form. Many tax professionals provide "organizers" to help you sort your financial records effectively. The more organized, the better he is able to prepare your return in the shortest time (and the more money you can save in fees).

A Final Check

  • Make sure your CPA is licensed by the state CPA association. If you decide to hire a CPA, check with your state CPA Society to verify her license and to see if any complaints have been filed. If several complaints have been filed, look elsewhere.
  • Keep accurate records all year. Or, at least organize your records before giving them to your tax professional.
  • Create an outline of your financial picture. You should have a general idea of your financial situation before you begin searching for a tax professional. Are your taxes relatively simple or complicated? Do you run a business from your home, have multi state holdings or limited partnerships? The better you understand your financial needs, the better prepared you are to find someone to serve your needs.
  • Don't wait until the last minute. Whether you are planning to complete your return yourself or hire someone to complete it for you, the earlier you begin the process, the better. If you just can't file on time, remember the last day you can file for a four-month extension without penalty is April 15, 1999. But, if you think you owe, you still have to pay by April 15 to avoid interest and penalties.
  • Know your options. Certified Public Accountants are not the only help available for tax preparation. There are a number of good options, including tax attorneys, Enrolled Agents, some Certified Financial Planners and consumer retail tax preparation companies (such as H&R Block).


CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913, the year the federal income tax was created, and has served four generations of tax professionals and their clients. For more information about taxes, visit the CCH website:

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