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Ask The EDD Lawyer – How To Protect Yourself When Retaining A Tax Professional

By Robert S. Schriebman

February 3, 2017

INTRODUCTION

The IRS recently released a guideline on factors to consider when selecting a tax preparer. 2017ARD 021-3 came out on January 31, 2017. While the guideline discusses the steps to take when selecting someone to do your taxes, I would like to add my own two cents and talk about selecting a professional tax advisor. In my practice I have seen what happens to well-intended people who get seriously injured because their tax advisor is a “know-it-all.” While I have a great respect for CPAs, too many want to handle every tax matter or problem facing their client and they “Go where no CPA has gone before.” (Thank you Captain Kirk.)

Who Can Practice Before The IRS?

Here are some tips to take into consideration when hiring a tax representative. When discussing IRS practice I am referring to such skills as audit representation, collection representation, and litigation in the U.S. Tax Court. A simple tax return preparer, who is not licensed to practice before the IRS, is not allowed to represent taxpayers in these highly disciplined skills. Only the following groups of professionals are allowed to practice before the IRS:

  • Attorneys
  • Certified Public Accountants (CPA)
  • Enrolled Agents
  • Enrolled Actuaries

Hiring A Tax Representative

Here are some tips to take into consideration when hiring a tax representative.

  • Make sure the representative is currently licensed and in good standing. In all the years that I have been practicing, no client has ever asked me to prove that I am currently licensed to practice law and in good standing with the California Bar Association. The public needs to be more aware and more proactive.
  • Make sure that the representative has the experience and skill level necessary to take on your matter. For example, there are too many CPAs and Accountants who want to be all things to all people. So, they take on a matter because they do not want to lose you as a client. However, you wind up being the biggest loser of them all because your tax advisor does not know how to effectively represent you. I see this in many EDD matters, especially tax audits.
  • Check the preparer’s history. You can check with professional associations such as the State Bar of California and the State Board of Accountancy. You might even consider checking with the Better Business Bureau.
  • Avoid preparers who want to give you a cash advance on your refund or who request they be allowed to negotiate your refund check. You should also avoid anyone who bases a fee on a percentage of your refund.
  • Make sure your preparer is not a “fly-by-night operation.” Will the preparer still be available after tax time in the event the IRS or FTB has questions about your return?
  • Never sign a blank tax return. If a preparer asks you to do this, run!
  • Don’t play games with the tax system or your preparer. Provide ample and accurate information and documentation that will allow a full and complete return to be filed.
  • Review your return before you sign it. Ask questions if you do not understand anything in your return. Today’s tax returns are far more complex and voluminous than they were just a few years ago. It’s boring and difficult to understand everything on the return. However, what is on the return is your responsibility.

Conclusion

If you are experiencing marital issues and difficulties, you should consider filing a separate return and also retaining a different and an independent preparer. If you sign a joint return that is negligent or fraudulent, or if you sign a joint return and do not fully pay, you are jointly and severally liable and responsible for what is stated in that return and what is owed per the return. This applies to the FTB as well. Innocent Spouse Relief is not easy to get. The process could be expensive if you have to hire a tax expert to represent you. If you are seeking Innocent Spouse Relief, you will have to apply to both the IRS and FTB. These two processes involve much professional time and skill. If your representative has never done this type of work, get someone who has.

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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.

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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