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SALT LAKE CITY — More than half of the tax returns sent into the IRS this year so far have been filed by tax preparers. But only four states regulate tax preparers, and Utah isn't one of them.
In Utah, a state-issued license is required for electricians, veterinarians, or even someone who applies false eyelashes. But anyone can legally prepare others’ taxes without any training whatsoever. Many consumer groups and tax professionals say they are concerned about careless mistakes and outright fraud.
“People are owing tens of thousands of dollars to the IRS, to the point where the Department of Criminal Investigations is getting involved,” said Jake Johnstun of Integrated Accounting.
He is an enrolled agent.That means he's been certified by the federal government as a tax expert. He said he's had many clients come to him after awful experiences with tax preparers who did not have to meet even minimum standards for training and competency.
“The IRS is coming after them, so we’ll have to step in, amend those returns to make them right,” he explained. “Then those people will owe interest and penalties on the tax they should have paid in the first place.”
If the tax preparer doesn't do the job right, the customer will pay the price, even if they’re the victim of incompetence or fraud.
“When you sign that return, it’s your responsibility that everything is accurate,” Johnstun explained.
- Check their qualifications and history
- Learn about their service fees
- Ask about electronic filing
- Ensure you can contact them after return is filed
- Never sign a blank return
- Review entire return before signing it
- Make sure preparer signs with PTIN number
When choosing a tax preparer, he said the best bet is someone who is either an enrolled agent, a C-A or a tax attorney. Steer clear of any preparer who charges fees based on the size of your returns, he warned.
“I’ve seen fraud on returns where a tax preparer decides, you have $50,000 in charitable contributions when you don’t,” he said.
Johnstun also said he's seen tax preparers simply disappear once the tax season ends.
“Someone that’s temporary, never seen them before, never heard of them before, is someone to avoid,” he said.
Also, be skeptical if a preparer promises an unbelievably big return, Johnstun said.
“If a tax preparer fraudulently changed numbers to increase the refund for you, or increase his business because of getting that reputation of a big refund, they you’re totally responsible,” he explained.