It is important to choose your tax professional carefully. The news has been full of headlines over the last couple of years about tax professionals doing wrong, whether it’s the late-night advertisers pitching pennies on the dollar settlements and not delivering, or tax preparers caught preparing large numbers of fraudulent tax returns for their clients, or the payroll services stealing employment taxes. Taxes are stressful and the tax professional should not add to that stress (granted you may hear things you don’t want to hear – like you have to pay, you can’t take that deduction, etc.). Despite the headlines created by the bad apples, there are many more very good tax professionals for all levels of taxpayers.
Some tips to consider:
1. Identify your need and find a professional with appropriate skill and experience to serve that need. There is a very big difference between preparation of a simple individual wage earner’s tax return, a complex tax return for a large international business, handling an audit, and litigating a tax dispute in the U.S. Tax Court.
2. Always speak directly with the tax professional that will be providing you service. If you are filtered through a big call center, that is probably not a great sign that you will receive the personalized service you deserve.
3. When it comes to tax debt, beware of the promise to settle your debt after only a couple of basic questions. Tax debts owed to the IRS are settled through an offer in compromise and generally require a very detailed financial analysis. The IRS actually does settle tax debts, but there are very specific criteria that must be met before the IRS will agree to do so. Even then, a tax professional can’t offer up guarantees as the IRS usually will have the last word.
4. Don’t hire a tax professional until you understand the service they will provide, limitations on the service, and the fees.
5. Always review the fee agreement before hiring a tax professional. The written fee agreement that is provided to you should be consistent with your understanding of the services to be provided and the fees for those services.
6. It should be clear if you are being charged by the hour or on the basis of a flat rate.
7. Guarantees or implications of a guaranteed outcome are a major red flag. There are many variables that impact the outcome of a tax matter, just like any other legal issue.
8. Most communities have some reputable tax professionals. Stick with those. Often, the reputable professionals will tell you flat out when a particular issue is not within their practice area and will refer to someone they know to have experience with the issue.
9. Do your homework before you contact a professional. Ask questions such as what he or she would plan to do specifically in your case, how long it is expected to take, and what are the possible outcomes to a given strategy.
10. Find out if the professional offers a free initial consultation.