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Published On: Sun, Jun 9th, 2019

Ideas to Find Legitimate Tax Preparer to Avoid Possible Crimes

Tax evasion means unlawful fudging of taxes by trusts, corporations, and individuals. Tax evasion entails taxpayers deliberately to misrepresent the actual affairs to tax authorities. They do this to decrease their tax liability. People often report their taxes dishonestly, such as declaring less profits, income, gains, or than actually earned amount and overstress deductions.

Tax evasion is associated with the informal economy. Remember, the IRS doesn’t tolerate tax evasion and tax fraud. They have to collect taxes and ask you to pay fine for late filing or negligence. The penalty of civil tax fraud may be over 75% of the tax owed. Criminal investigation unit of IRS can call you for tax prosecution. If you want to avoid this situation, you should pay your taxes honestly without any delay. Moreover, hire a qualified lawyer, such as Los Angeles criminal defense lawyer to represent you in the court.

Tax Crimes

Some common tax crimes are tax evasion, filing false tax returns, failure to gather employment taxes, unable to pay taxes and unable to file tax returns. Tax evasion may include inability in reporting all income. It also includes overstating the tax deductions. Remember, penalties for tax evasion are severe. They may range almost five years in jail along with $500,000 fine and prosecution cost for every tax crime.

After completing a criminal tax case, the criminal investigation unit of IRS may refer the case to examination division of IRS. They assess taxes and add a penalty for tax frauds. IRS will not spare you for civil tax frauds. You have to pay fine and bear imprisonment. Fraud fines may work differently as compared to the tax bill and tax debts. Moreover, civil fraud penalties are dischargeable in bankruptcy Chapter 7.

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Difference Between Tax Fraud and a Mistake

Tax evasion or tax fraud involves deliberate wrongdoing. It may describe an intentional violation of legal duty. Remember, carelessness is not tax fraud. The IRS may decide whether tax fraud is committed by checking badges of tax frauds. Common badges include:

  • Inadequate records
  • Understatement of income
  • Failure in filing tax returns
  • Concealment of assets
  • Inconsistent or implausible clarifications of behavior
  • Unable to cooperate with IRS authorities
  • Try to conceal illegal acts
  • Engagement in unlawful acts
  • Dealing in cash
  • Unable to make predictable tax payments

If you are facing any of these problems, IRS may audit you to investigate the possibilities of crime. To protect yourself from the IRS, you must hire a defense attorney to take your case. Giving evasive answers or lying to IRS investigators can increase your problems. Ask your lawyer to deal with IRS investigator to avoid possible troubles.

For your safety, hire a tax preparer who can prepare tax returns for you. A professional tax preparer can save you from several potential troubles.   

Why do you need a tax preparer?

Changes in tax laws, easy-to-overlook deductions, and an endless series of forms may lead to different confusions. If you are finding some help with a tax return, you are not alone because many taxpayers try to hire a professional preparer. You have to be careful while picking your tax preparer because you are officially responsible for the details on your tax return.

Keep it in mind that you are going to trust a person with your personal information, such as income, names of children, financial life, and social security number. Numerous return preparers are honest and professional to work with their clients. Here are a few tips on finding a legitimate account or tax preparer.

Check Qualifications of the Person

As per new regulations, the paid preparers should have a PTIN (Preparer Tax Identification Number). Along with PTIN, you should ask the preparer if he/she is affiliated with any professional organization and attends education classes. The IRS phases a new test requirement to ensure that the agents who are not enrolled must have met the minimum experience requirements. The people who subject to the test may become a registered preparer of tax return after passing it.

History of Preparer

Carefully evaluate if the tax preparer has a dubious history with BBB (Better Business Bureau) and check for licensure status and disciplinary actions through accountancy state boards for specialized public accountants, the bar associations for IRS enrollment and association for an attorney.

Certified Public Accountants (CPA)

A CPA should pass a state professional exam and meet the licensing criteria of the state. This person will be responsible for representing you before the IRS in case of any collection or payment issue, appeal, and audit. You can’t trust every CPA to prepare tax returns. Ask if the person is enrolled in ongoing education courses. The typical cost of hiring a CPA preparer for your tax return can be $273 or even more as per the regulations of your state.      

Select an Enrolled Agent

After getting a license by the IRS, the tax preparers can represent you before an agency. The enrolled agency should pass a comprehensive exam covering preparation of tax return for business and individuals, representation and federal tax planning. They should complete 72 hours of ongoing education every 3 years. Numerous EAs emphasis on a particular tax area, so make sure to check their specialty that should match your concern. You may find an enrollment agent via the state association of agents. As compared to CPA, these agents may be cheaper to use and charge an average of $197 or even more.

Tax Attorneys

Lawyers often charge highest fees for tax preparation, as per national society of accountants. It will be useful to sough their services only to deal with a tax dispute. If you are facing some particular problems, such as unclear tax law, a problem in audit, trouble in tax planning, etc. They can represent you in a better way before the IRS.

Annual Filling Program Participants

If you are not a certified public accountant, enrolled agent, or attorney, this voluntary program is for you. The IRS provides this particular title to preparers who complete 18 hours of continuing courses for the preparation of particular tax year, such as 6 hours federal refresher tax law test and course. However, these professionals can’t represent you before the IRS.

A category PTIN holder includes other preparers with an active PTIN from IRS without any professional license. They don’t participate in the annual program for filing season. These people are authorized for the preparation of tax returns, but can’t represent anyone before IRS.

Check Out a Preparer

With the help of the directory of federal return preparers of IRS, you can verify the credentials of a tax preparer. Before selecting any person, you have to confirm his/her credentials, level of expertise, and updated PTIN. You can also check the disciplinary actions and status of the license or tax preparer. If you have a CPA preparer, you can use the national association of accountancy of state board. Before taking the services of an attorney, you can contact an association of state bar where the person practices.     

You have to be careful with red flags, such as brag that a tax preparer may get you a large refund or promise for a particular refund without checking your previous tax returns or records. Keep it in mind that the refund is directly deposited in the bank account instead of the account of your preparer.

Make sure to legitimately obtain a refund because any audit can identify spurious refund. If your return has fraudulent deductions, you will have to face serious consequences, such as banned from the income tax credit in the coming years.

A reliable preparer will see your receipts and records and ask different questions about your finances. The preparer should not utilize your last stub instead of using W-2 for the completion of your return because it is illegal.

Ask About Fees for Their Services

The standard cost of employing a professional preparer to file a return may include a tax return and Form 1040 with “A” schedule, as per the national accountant society. The amount may be $270 or even more as per your state. Before hiring a tax preparer, you should ask about their fees. They will explain the fee structure and give a price estimate after your initial interview.

A military person earning $54,000 or less can qualify for free assistance from the IRS. A disabled person, a person who doesn’t know English or person more than 60 years can also qualify for free tax preparation services. If your earning is less than $62,000, you can get the advantage tax-prep software for the completion of your return.

Review Each Tax Return

Keep it in mind that you are legally responsible for the details on your tax return. You should carefully look at the work of preparer before filing and signing. Paid preparers should sign returns and write their PTIN. Make sure to get the copy of the tax return. Prepare notes of some methods to access your preparer after the filing deadline to avoid any trouble.        

Author: Michael Wright

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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