What’s hiding in your Tax Man’s Closet?

Can I trust my Tax preparer?

It is that special time of year already! As our W2’s and 1099’s come trickling in, we are reminded to start organizing our 2010 paperwork because March and April are right around the corner. Over the years, I have had my share of tax horror stories and all of them were predicated on bad tax advice. I won’t go into the gory details, but suffice to say, I learned that taxes are not meant to be taken lightly.

The IRS estimates that the average taxpayer needs over 20 hours to do his or tax return, or longer if they are filing a Schedule C for business or a Schedule E for real estate. I am busy enough with work, rowing, more work, and watching American Idol that I choose to have a professional take care of my taxes.

Before I delve any deeper on the subject, a disclosure: I am not a licensed tax preparer and don’t ever want to be one. The purpose of this blog is not to give advice on specific tax guidelines, but to instead pass on a conversation I had last week with my tax person, Donna Gary, from United Financial Services in Davis, California. She reminded me that she is a licensed CRTP. What the heck is that?

Are you ready for more acronyms? Hold onto your hats – a CRTP is a CTEC Registered Tax Preparer. By law, in the State of California, when an individual prepares taxes for a fee and is not an attorney, a certified public accountant (CPA) or enrolled agent (EA), he or she MUST register with the California Tax Educational Council (CTEC). Once registered, he or she is….wait for it…..a CTEC Registered Tax Preparer or CRTP.

We all know the tax laws are ever changing and massive. I recall hearing a Senator a few years back say the Internal Revenue Code and regulations add up to one million words or nearly seven times the length of the Bible. I don’t know about you, but I can’t even get through a John Grisham novel from start to finish, let alone the exciting prose in the IRS tax guide. So why do I care about my clients knowing what a CRTP is? As I have gone through a recent series of necessary and mandatory testing and licensing, I want to make sure you are taking the same precautions with your tax person – trust but verify comes to mind.

Here is a list of risks you take by having your taxes prepared by an unregistered preparer according to the CTEC:

  • It may increase your probability for additional taxes, interest, fines and penalties;
  • It may minimize your opportunity to claim valid deductions; and
  • It may prevent you from having any legal recourse if fraud or unlawful acts occurred because the person preparing your taxes was not bonded.


Beware of the preparer who…

  • Refuses to sign your return – something is wrong;
  • Ask you to sign a blank form to be filled in later;
  • Refuses to give you a copy of any document he or she signs;
  • Did your taxes last year but may not be registered to prepare them this year;
  • Was referred by a family member or friend, but is not registered to prepare taxes for a fee;
  • Charges a fee based on a percentage of the refund;
  • Claims to be a CRTP but is not listed on the CTEC website.

 Based on personal experience, you would rather find that proverbial skeleton in your tax man’s closet now, instead of waiting a few years down the road when Uncle Sam calls you personally and informs you that he has a very large tax fine with your name on it, and oh by the way, it has accrued late fees and penalties.

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