ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – TIPS FOR FINDING A QUALIFIED TAX RETURN PREPARER
By Robert S. Schriebman
The extensions granted by the IRS and California taxing agencies for the filing of returns and the payment of taxes have expired. In light of this the IRS, on July 7th, issued a press release offering helpful hints on finding a qualified return preparer as well as a qualified tax professional (IR-2020-139). This article I will discuss these IRS hints and give you a few of my own. Over the years I have seen how bad tax advice and incompetent representation can cause severe problems, putting your business in jeopardy, and exposing you personally for corporate and LLC taxes.
Helpful Hints From the IRS
- Chose someone you can trust. Keep in mind you are giving this person vital personal data including your Social Security number and information on your income and investments.
- Review the tax return carefully before signing it. You are legally responsible for what is on any return you file. It does you no good to point your finger at your preparer and blame him/her for what is on the return. Auditors, whether from the IRS or EDD, have heard it all before. You do not get a pass if you claim you did not read the return and ask questions if you do not understand what is on that return. Telling the auditor, “This is what my accountant told me to do,” carries no weight.
- Make sure the preparer signs the return. Not just income tax returns but payroll returns as well. The preparer must also put his/her personal tax identification number on the return.
- Never sign a blank return. If your preparer wants you to do so, find another preparer.
- Make sure professional fees are established before the return is filed.Never pay a fee based on a percentage of the refund you may receive.
The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This is a free resource with a sortable database. It includes the name, city, state, zip code, and the preparer’s credentials. Here are a few more publications offered free from the IRS:
- Things to Remember When Choosing a Tax Preparer
- How to Choose a Tax Return Preparer
- When, and How, Do I File a Complaint About a Tax Preparer
A Dozen Helpful Hints from Bob
The helpful hints offered by the IRS in its latest press release are absolutely spot on. Having said this, I look at things from a different perspective because I have spent decades unwinding terrible messes that taxpayers have gotten into because they had either inexperienced or incompetent representation. There are too many accountants and attorneys who are “know-it-alls” and do not have the basic integrity to level with their clients that they are over their heads. This is especially true when it comes to handling EDD audits. I have seen representatives put their clients at risk by giving EDD auditors information and documentation that the EDD is not legally entitled to have. I have also seen harsh assessments as the result of gamesmanship, a total absence of communication, and representatives who say too much or lose their cool. Out of all this I have developed “Robert’s Rules” which I will pass onto you:
- Make sure your representative is properly licensed. I have actually had clients represented by “lawyers” who are not licensed to practice law; phonies!
- Make sure your representative has proper credentials. This includes a CPA certificate, current license to practice law, or an Enrolled Agent. The EDD has no standards for allowing representation. Literally, your barber can represent you before the EDD!
- Try to retain a Certified Taxation Specialist. This person has passed not only the required state bar exam, but an additional bar exam for certification in a specialty.
- Just because someone is a certified specialist does not mean that he/she has any experience handling your specific type of matter.
- Ask the nature and extent of your representative’s experience. How many audits or collection matters has this person handled?
- Establish fees in advance. Never pay a fee based on a percentage of taxes saved. Pay either a flat fee or an hourly rate.
- Avoid paying a bonus for results. You have paid for the initial representation, why pay twice?
- Have a written fee agreement. Most states require a written fee agreement when services exceed a specific minimum fee.
- Facing the tax man is not a DIY project. Don’t go it alone. Get professional help.
- Don’t expect something for nothing. Free legal advice is not worth the price.
- Keep your month shut. Too many people get into too much trouble because they want to make a good impression with the agent or collector. They wind up saying too much. This is especially true with the EDD when anything you say can and will be used against you.
- The tax man is not your friend.
Choosing a competent professional to do your tax returns or to represent you in a tax controversy may be one of the most important decisions you will make. If you have a good professional, stick with that person and avoid changes.Choose wisely.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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