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The Honolulu Advertiser
Posted on: Thursday, February 14, 2008

Tips on picking a tax form preparer

By Robbie Dingeman
Advertiser Columnist

StoryChat: Comment on this story


The Better Business Bureau of Hawai'i offers consumer tips, complaint history and lists of accredited businesses at www.hawaii.bbb.org

On the Web, the Internal Revenue Service information and tips at www.irs.gov

The state Department of Commerce and Consumer Affairs tracks complaint history and offers useful consumer information at www.hawaii.gov/dcca

On O'ahu, call the Consumer Resource Center at 587-3222 or 587-3295 between 7:45 a.m. and 4:30 p.m. weekdays.

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  • Be cautious of preparers who claim they can obtain larger refunds than other preparers.

  • Avoid preparers who base their fee on a percentage of the refund.

  • Use a tax professional who signs your tax return and provides you with a copy for your records.

  • Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after it has been filed.

  • Review your return before you sign it and ask questions on entries you don't understand.

  • No matter who prepares your tax return, you are responsible for all the information on it. Never sign a blank tax form.

  • Find out the person's credentials. Only attorneys, certified public accountants and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection and appeals. Other preparers may only represent taxpayers for audits of returns they actually prepared.

  • Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and and holds them to a code of ethics.

  • Ask questions.

    Source: Internal Revenue Service

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    It's only February, but those end-of-the-year W-2 forms signal the official start of tax season and maybe time to find a tax preparer.

    Government officials, the Hawai'i Better Business Bureau, consumer advocates and yes, even the Internal Revenue Service offer some tips on finding the right tax adviser and avoiding scams.

    Dwight Kealoha, CEO of the Hawai'i BBB, cautions consumers that tax preparers aren't required to have a certain degree or certificate so their qualifications can vary widely.

    "It's not like the wild, wild West, but it's territory that's pretty uncharted," Kealoha said. "You don't need to be certified. Anybody can hang a shingle out and be a tax preparer."

    After someone prepares your tax return, read it over thoroughly. Kealoha said he missed an error in his own tax return last year. He said his preparer sent in the wrong draft of a form instead of an updated form with new information.

    Instead of getting an expected refund, he found himself facing IRS questions and potential penalties. It took him eight months to resolve the matter. "It cost me a lot of time and resources to get it straightened out," he said.

    Kealoha also suggests getting referrals from friends or family and getting an estimate for the fee prior to authorizing any work.

    He said an interview with a prospective tax preparer should tell you about their training, experience and knowledge of tax law. He suggests asking questions that include:

  • Are they a member of a professional organization with continuing education requirements and a code of ethics?

  • Are they willing to guarantee the accuracy of their work and amend the return if there is a mistake?

    Find out how long they have been in business. You want a tax advisor who will still be around to answer questions that may arise later on. Check the BBB Web site (www.hawaii.bbb.org) to read reliability reports and see if the preparer's business has complaints from others.

    "Be suspicious of anyone who tells you you don't have to pay tax, the tax code is unconstitutional or taxes are voluntary," said to Stephen Levins, executive director of the Office of Consumer Protection.

    Levins said it's important to remember that, in the eyes of the law, you are the one responsible. Filing a protest tax return can have consequences and penalties for you not the preparer.

    "As a taxpayer, you sign the form at your own peril," Levins said.

    And Levins echoed Kealoha's advice that not everyone needs to hire a company or accountant to do their taxes. "If you have a simple return, you don't necessarily have to go to a fancy tax preparer," he said.

    Kealoha also encourages consumers going through a divorce or foreclosure to find a preparer who understands their tax situation, since that requires some specialized knowledge.

    And he said to be wary of any preparer who promises clients an immediate partial payment of your tax refund. If you read the fine print, he said, you'll usually find that money comes with a big catch it's a loan carrying high interest rates.

    Lastly, Kealoha said: "Don't believe anyone who guarantees you're not going to be audited."

    Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.

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