If you pay someone to prepare your tax return, make sure that tax preparer is legal. California law requires anyone who prepares tax returns for a fee to be either an attorney, certified public accountant (CPA), enrolled agent (EA), or registered tax preparer with the California Tax Education Council (CTEC).
Hiring a tax preparer that cannot be verified as one of those four professionals may prevent you from having legal recourse against fraud, as well as increase your chances for additional taxes, interest and fines.
Why risk it? Finding a legal tax preparer is pretty easy to do, said Mary Beth LaMunyon-Jones, chair of CTEC, a state-mandated nonprofit organization that registers unlicensed tax preparers.
Although professional tax preparers are required to sign your tax return to show proof of work, it is still you, the taxpayer, who is ultimately responsible for all information listed on the tax returnno matter if it is right, wrong or even fraudulent.
Unfortunately most people dont pay much attention to the legal status of their tax preparer until after a problem arises, said Celeste Heritage, CTEC administrator.
In addition to state rules, the Internal Revenue Service is now requiring all paid tax preparers to register for a Preparer Tax Identification Number (PTIN). Tax preparers must include their PTIN on every federal tax return they prepare for clients.
If they dont have a PTIN, you should report them to the IRS, said La Munyon-Jones.
To verify the legal status of…
- Attorneys, California State Bar
- Certified Public Accountants (CPAs), California Board of Accountancy
- CTEC Registered Tax Preparers (CRTPs), California Tax Education Council
- Enrolled Agents (EAs), Internal Revenue Service
CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect taxpayers against fraud and incompetent tax preparers. Visit www.ctec.org or call (877) 850-CTEC for more information.