Be Careful When Selecting a Tax Preparer

The Franchise Tax Board (FTB) and the California Tax Education Council (CTEC) remind the 65 percent of California taxpayers who use a paid tax preparer to be cautious when choosing a professional.

CTEC and FTB partner to educate taxpayers about tax preparers’ legal responsibilities, and to make sure preparers are complying with the law. CTEC is a nonprofit corporation that registers individuals who assist or prepare returns for a fee and are not licensed Certified Public Accountants (CPA), Enrolled Agents (EA), or attorneys. CTEC was founded under the California State Legislature in 1997 to promote proficient tax preparation within the state.

The IRS/FTB joint brochure, FTB Publication 982, How to Select an Income Tax Return Preparer can help people when choosing a tax professional. The IRS also has tips for choosing a tax preparer.

The following organizations provide information about licensed and registered tax professionals in California:

· California Board of Accountancy dca.ca.gov/cba.

· California Society of Certified Public Accountants calcpa.org.

· State Bar of California calbar.ca.gov.

· California Society of Enrolled Agents csea.org.

· California Tax Education Council ctec.org.

Taxpayers are cautioned to avoid tax preparers who:

· Claim they can get bigger refunds than other tax preparers.

· Base their fee on a percentage of the refund amount.

· Refuse to sign the tax return as the paid preparer even though they are required by law to do so.

· Do not provide a copy of the tax return for the taxpayers records.

CTEC-registered tax preparers must complete courses on federal and state tax laws each year, plus obtain a $5,000 surety bond to protect clients against fraud. Unregistered individuals are issued a $2,500 penalty, which doubles if they continue to prepare returns. Other regulated tax preparers such as CPAs, EAs, and attorneys have their own industry requirements.

Last year, FTB assessed penalties on 113 preparers for failing to be properly licensed or registered. If taxpayers suspect a tax preparer is fraudulent, they should inform FTB online at ftb.ca.gov by selecting Report Tax Fraud under the online services, or by calling 800.540.FILE (3453).