Millions of people hire tax preparers every year, but not everyone takes the time to check those tax preparers out. Before handing over your salary data and Social Security number — or even your medical bills and divorce documents — to someone you just met, here are a few ways you can do a little audit work of your own.
Where to go: The IRS preparer directory
What to look for: The preparer’s name
People who prepare tax returns for compensation must have a Preparer Tax Identification Number, or PTIN, says Cindy Hockenberry, director of tax research and government relations at the National Association of Tax Professionals in Appleton, Wisconsin. This searchable directory lists people who have PTINs as well as professional credentials recognized by the IRS, such as certified public accountant, enrolled agent, Annual Filing Season Program participant or attorney designations.
Where to go: State licensing board websites
What to look for: Proof that your preparer’s CPA license or law license is valid and in good standing
State licensing authority websites are good for verifying CPA licenses; for law licenses, your state’s bar association website or state court system website is worth a look. Often you can find out whether a license has been revoked, how long the person has been licensed and whether the licensing authority has taken any action against the preparer.
Where to go: Professional association websites
What to look for: Violations of the association’s ethics or standards of professional conduct
If the preparer claims to be a member of, or have a designation from, a professional association, head to the association’s website and check it out, Hockenberry says. You can even contact the association to ask about complaints against specific preparers.
Where to go: The Better Business Bureau website
What to look for: Complaints
The Better Business Bureau got more than 1,300 complaints against tax prep businesses in the United States and Canada in 2017. The biggest beefs: preparer errors that resulted in fines and fees. Customer service, billing and contract problems were also common complaints. The Better Business Bureau site is searchable by category and sortable by rating.
Where to go: Local tax preparer regulators
What to look for: Claims, complaints or regulatory actions against the preparer
The tax prep industry is largely unregulated, but more and more states are starting to police tax preparers, according to California Tax Education Council spokesperson Gigi Jones. That’s providing another way for taxpayers to check out the people who have access to their very personal information. In California, for example, tax preparers who are not CPAs, EAs or attorneys must register with the California Tax Education Council.
Later this year, the organization will start publicly reporting disciplinary actions against tax preparers. One sector they’re trying to home in on “is what we call ghost tax preparers,” Jones says. “These are tax preparers who set up shop starting in January. They do countless tax returns, but they never sign it, and then right after the April 15 deadline they disappear.”