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CCH Offers Insight On How To Pick A Tax Preparer
(RIVERWOODS, ILL., February 5, 2003) – Each year, millions of
Americans turn to professional tax preparers for help with their
annual returns as they seek to minimize their tax liability, without
inadvertently crossing the IRS. According to the latest IRS estimates,
in 2000, nearly 69 million returns were submitted by an accountant,
tax attorney, enrolled agent, a retail tax service or other paid tax
preparer. To help you pick a professional who’s right for you, CCH
INCORPORATED (CCH), a leading provider of tax law information and
software, offers these tips.
Step 1: Identify Several Candidates
- Go with know-how. It’s
a good idea to look for a tax professional who has consistent
experience in tax, especially since tax laws change frequently.
Since 1995 alone, there have been almost 1,500 amendments to
Internal Revenue Code sections. The increasing use of time-delayed
effective dates for tax legislation means that new provisions can
sneak into the tax code with little notice years after they were
approved. Unless you’re tracking new tax developments every day,
chances are you’re not aware of all of the changes that have taken
- 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 maintain computer databases of local
accountants and other tax preparers and will provide free assistance
in helping you select a tax professional in your area. Also, many of
these organizations provide free assistance to low-income taxpayers
who may not be able to afford tax preparation help. Finally, there are
a number of Internet sites that provide listings and directories of
accountants organized by locality.
Step 2: Ask the Right Questions
Once you have identified several candidates, take the time to
discuss these important questions with them:
- What is the focus of your
practice? Some tax professionals have specialties in areas
such as real estate or 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 or has
access to research tools covering those states. For example, if
you receive income from a partnership operating in another state
or live in one state and work in another, selecting a tax
professional with interstate knowledge is important.
- Does your experience meet
my needs? You should have a general idea of your financial
situation before searching for a tax professional. Are your taxes
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 meet them.
- 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? How and when will
you be billed? Will you be billed for research time if needed? Get
the billing and payment terms in writing.
- Are there any additional
fees? If you think, for example, you are interested in taking
advantage of a refund anticipation loan, be sure to ask about
associated fees. Most likely, there’s the fee to the tax
preparation company to complete your tax forms, a separate fee to
file your return electronically - - which
is a requirement for loan program participation – and the bank
loan fee itself. You may find you’re paying a hefty interest
rate on your own refund.
- How do you characterize
your professional style? Does she take an aggressive approach
to minimize the tax burden even if it means incurring questions
from the IRS or an audit? Or does she take a conservative path and
risk paying a few extra dollars? 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? Does the preparer use current-year computer
software to prepare your returns? Also, ask if she has access to
tax research services, such as CCH, should the need for research
- What do you need from me? Ask
exactly what information is needed and in what form. Many
professionals provide print or electronic "organizers"
to help you sort your financial records. Some ask that all tax
information be saved on a computer disk, which can be downloaded
into tax return software. The more organized you are before you
give your tax preparer your records, the better he is able to
prepare your return in the shortest time (and the more money you
can save in fees).
Step 3: Do 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 complaints have been
filed, look elsewhere.
- Take a good look at your
return before it is filed. Even if your return is prepared and
signed by a paid professional, you are responsible for the accuracy of
everything on there. Make sure the information on your return is
Some General Hints
- Keep accurate records all
year. Or, at least organize
your records before you give them to your tax professional. That
means saving important receipts, stock earnings statements and
salary records. By organizing your tax information before giving it
to your tax professional, you’ll save the cost of having him
organize it for you.
Consider filing electronically. Electronic
filing allows individuals or their tax professionals to send a return
directly to the IRS through a computer modem at designated locations.
Although a fee is often involved, the IRS has initiated a program to
provide free electronic filing through participating software
providers. The main benefit of e-filing is that you receive your
refund much faster than if you file through the mail. Filing
electronically may not be the best option if your refund is small
because the fee may be larger than your refund.
- Get some mileage out of paying
your taxes. You can use a credit card to pay taxes and in exchange
take advantage of some benefits, such as matching airplane miles
offered by credit card companies. Consider the benefits of charging
your taxes, then quickly paying off the debt. You can use a credit
card this year to pay your taxes when e-filing your return or using
- Don’t wait until the last
minute. The earlier you begin, the better. If you just can't file
on time, the last day you can file for a four-month extension without
penalty is April 15. Even if you file for an extension and you think
you owe, you still have to pay by that date to avoid interest and
- Know your options. Certified
public accountants are not the only help available for tax
preparation; there are also tax attorneys, enrolled agents, certified
financial planners and consumer retail tax preparation companies.
About CCH INCORPORATED
CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in
1913 and has served over four generations of business professionals
and their clients. The CCH web site can be accessed at cch.com.
The CCH tax and accounting destination site can be accessed at tax.cchgroup.com.
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