Professional Tax Services
of Long Island, LLC
What are the requirements for being a tax pofessional?
Prior to 2011, there were no licensing or educational requirements for someone to prepare income tax returns. Because of the lack of oversight within the industry, there are at least a handful of clowns in this business. Tax preparers go by many names: Tax Preparer, Tax Accountant, Tax Consultant, Tax Pro, etc. How does a person choose an income tax preparer? Stick with the three professional designations to provide some comfort level when in choosing your tax pro:
· The “CPA” or Certified Public Accountant is the most commonly recognized
designation in this field. To obtain a CPA designation, one must complete a stringent college accounting program followed by
a difficult exam. After one passes the exam and obtains certain experience requirements, the CPA must complete and pass forty hours
of Continuing Professional Education (CPE) each year to maintain one’s license.
· The “EA” or Enrolled Agent, does not require an accounting degree, but does require passage of a lengthy tax exam administered
by the IRS. An EA must also maintain CPE credits on an ongoing basis.
· Attorneys may specialize in taxation. Often, this is done in conjunction with related practice areas like estate planning or real estate. Lawyers have significant college requirements and must pass their state Bar Exam.
Because of the varying
degree of competency or lack thereof within the tax prep business, the IRS will require tax preparers to pass an IRS competency exam
starting mid-2011. There are also state requirements in the works for New York and elsewhere. In addition to an exam, the IRS will
also require tax preparers to take 15 hours of continuing education credits each year. CPA's, Enrolled Agents and Attorneys are exempt
from the new requirements because of the more stringent standards they are already subject to prior to these new IRS requirements.
Is my tax pro right for me? Ask questions!
Is your tax pro:
...A Licensed licensed CPA, EA or attorney?
...Degreed in accounting or tax law?
...Experienced in tax preparation?
...A full time tax and accounting professional or
a part-time/seasonal worker?
...A year-round resource to assist with tax and
financial questions when you need advice?
Should I use the tax preparer who is known
for getting clients huge refunds???
In
short, NO!
We all have that acquaintance who brags about the huge tax refund that “his guy” always gets him
or her. But is it for real? A good rule of thumb is , “If it is too good to be true, it probably isn’t (true).”
There
are four possible reasons you might get a huge refund:
2) The tax preparer did some funky things! If this is the case,YOU are responsible for reviewing the return and the information used to prepare it. And YOU are responsible for any tax, interest and penalties owed as a result of, to be polite, “inaccuracies” on such a return. If your tax pro is better suited for writing fiction, look elsewhere.
Slick marketing and a strong brand name is no substitute for the three professional designations, so choose wisely. Some tax shops
will hire staff without professional designations or appropriate college degrees, and instead, sell prospective employees their own
short in-house training program. They may offer a few, with higher scores, a seasonal part-time position. Some of the larger, well
known tax shops are often only open seasonally. Will they be there off-season when you need them?