The IRS has published its annual advice publication on how to choose a tax preparer cleverly named “Make a Wise Choice When Selecting a Tax Return Preparer”. They list ten (10) tips and explain each one. This article discusses each tip and how Attorney Haskell meets or exceeds the Internal Revenue Service standard.
The first tip is “Select an ethical preparer.” The Internal Revenue Service has put the most important issue at the top of the list. Their emphasis is on the fact that you are trusting somebody with all of your personal information. You must give your tax preparer the names, addresses, social security numbers, and dates of birth of yourself, your spouse, your children and any other dependants you may have. Right off the bat, you are giving your tax preparer everything necessary to steal your identity. On top of that, you give your tax preparer your employment information, your bank account information and your investment account information. An unscrupulous person could harm you severely. So too could a sloppy one. You are entrusting this person with a lot of confidential personal information.
Attorney Haskell is an attorney who has been in practice since 1987. He has handled the personal, confidential and even privileged information of his clients for all of these years. Attorney Haskell has been entrusted with the personal information of over ten thousand people without any breach or mishap. Louis Haskell is bound by the canons of ethics, and his clients are entitled to the standards of confidentiality and even privilege, associated with his being an attorney. Not only is everything you say to Attorney Haskell or one of his employees confidential, but attorney client privilege applies to all of your conversations. As such, not only is he not allowed to divulge information, he cannot be forced to. Attorney Haskell has not only secured vast amounts of personal information without mishap, but he has handled tens of millions of dollars of other people’s money, also without mishap. The ultimate proof of Attorney Haskell’s trustworthiness is that he has maintained a large and successful law practice in the City of Lowell for over a quarter of a century and has an unblemished record as documented by both his licensing board and the Better Business Bureau.
The second tip is “Ask about service fees.” The Internal Revenue Service is concerned about people who want to base their fee on the amount of the refund. The Internal Revenue Service is worried that such preparers will commit tax fraud on your behalf so as to enlarge their fees. You, of course, will be the one who gets into trouble. This is another reason why it is important to select an ethical preparer. An unethical one can cause you a lot of problems.
As for Attorney Haskell’s service fees, they are flat. In 2016, he typically charges $70.00 for an individual who has no dependents, no house and no business. $90.00 for the same return if they are either married or have dependents. If there is a schedule A then it is $110.00 and $150.00 if there is an owner occupied two family house. These amounts are true if the person owes tax or if the person is getting a $10,000.00 refund. Even rates for business and corporate taxes are fixed or time based, not refund based.
The third tip is “Be sure to use a preparer with a Preparer Tax Identification Number (PTIN).” Anybody preparing tax returns for a fee is required to have a current PTIN number. While having a PTIN number is no guarantee that a person is either qualified or reputable, not having a current PTIN number practically guarantees that they are not. To get a PTIN number, a person merely needs to clear a criminal background check, and pay a fifty dollar ($50.00) fee to the Internal Revenue Service. A person who cannot clear this simple hurdle is not somebody you want to be giving your personal information to or trusting to prepare your tax return properly. Once a tax preparer obtains a PTIN number, it is hard to lose it. However, it is not impossible. As such, a tax preparer who is showing you a PTIN number, but not putting it on the return, is a tax preparer that has lost the PTIN number. That means that either this person has been convicted of a crime, or this person has had so much trouble with the Internal Revenue Service that the Internal Revenue Service has not renewed this person’s PTIN number. Either way, this is not someone you should entrust with your personal information or to do your taxes. Attorney Haskell, of course, has a valid and current PTIN number. So too does his wife.
The Internal Revenue Service also suggests asking the tax preparer if they belong to a professional organization and if they are attending continuing education classes. Attorney Haskell is not merely an attorney, but a member of the Tax Court Bar. There are very few people who both prepare tax returns and can defend them in court. That is a unique association. Beyond that, he takes continuing education classes in the area of tax law. Most of his classes are on the business side, as business taxes are far more arcane than personal income taxes. In the past year, he has taken classes in areas such as expensing and depreciation, the research and development tax credit, the work opportunity tax credit, encryption (this not specifically a tax issue, but keeping all of Attorney Haskell’s clients’ personal information safe is important), resolving and compromising collection issues and audit defense, among others. Attorney Haskell subscribes to the various IRS services that update tax professionals on what is happening with the Internal Revenue Code and with the IRS. Sometimes when the changes are important, Attorney Haskell blogs on them. He often shares some of the more interesting internet tax articles on the Law Office of Louis S. Haskell’s Facebook page.
The fourth tip is “Research the preparer’s history.” This is surprisingly hard to do given its importance. Unlike a doctor, lawyer, realtor, plumber or automobile damage appraiser, tax preparers have no licensing board. They get a PTIN from the IRS and that is the end of it. The IRS article suggests checking with the state board of accountancy for CPAs. It references state bar associations for attorneys. In Massachusetts, Attorney Haskell is licensed by the Board of Bar Overseers. However, for plain vanilla or “unenrolled” tax preparers, there is no office to check. It is surprising that you give your tax preparer all of your personal information, but cannot check to see if there have been complaints against this person. Other than passing a criminal background check, there is no centralized authority to make sure that unenrolled tax preparers are truly reputable. The best the IRS can come up with in their article is to check with the Better Business Bureau.
As for Attorney Haskell, he is an attorney with over twenty-eight (28) years experience. He has been practicing in the city of Lowell since 1988, and his reputation is well established. Since the IRS says to check with an attorney’s licensing board, here is a link to the Board of Bar Overseers’ website. Unfortunately it cannot link directly to Attorney Haskell, but you can plug in Louis Haskell or the name of any other attorney. Though there is not a lot of information here, you can see that he has been practicing since December 1987; he has no record of public discipline and he is insured. Clients have been trusting Attorney Haskell with their private and personal information in Attorney Haskell’s practice without mishap. Here is a link to Attorney Haskell’s Better Business Bureau listing which gives him an A+ rating. To be “accredited” by the Better Business Bureau, you have to pay a fee. Attorney Haskell has not done that. This means that he has received his A+ rating without paying a fee.
The fifth tip is to “Ask for e-file.” The IRS now requires that any paid preparer who files more than ten (10) tax returns a year must e-file on their own e-file account, unless a client specifically opts to file a paper return, and signs an IRS form requesting that. E-filing is in every way superior to filing a paper return. It is faster and more secure, and it even saves on copying and postage. However, a tax preparer who does not offer e-filing is breaking the rules, and it is fair to wonder why. It is also fair to ask why you are giving all of your information to somebody who is violating such a simple mandate. Incidentally, as preparers are required to e-file, preparers are not allowed to charge extra for e-filing. Ninety to ninety-five percent (90 – 95%) of Attorney Haskell’s returns are e-filed and he has never charged extra for the service.
The sixth tip is “Provide tax records.” There are some records which are absolutely required, such as W-2 forms. Preparers are actually not allowed to rely upon the last paystub, in part because that often leads to inaccuracies. Interestingly enough, these inaccuracies will usually favor the Internal Revenue Service and not the taxpayer. However, as it is a forbidden practice, it is not wise to hire anyone who engages in it. There are other documents which the tax preparer is not required to have, but it is often useful to have the tax preparer review them. These would include various receipts and other financial records that document various write-offs that you are taking. Not only does this ensure a more accurate tax return, but it also gives you the opportunity to discuss with the preparer the adequacy of your record keeping. Keep in mind that Attorney Haskell is your tax preparer. He is not your auditor. If you tell Attorney Haskell that you spend a certain amount of money on a certain deductible expense, he is entitled to take your word for it. He is not certifying that the information in your return is accurate, but only that he does not know it to be inaccurate. As such, if you get audited and it turns out that your records do not support the numbers you have told Attorney Haskell to put on your return, then legally that is your problem. However, that is not Attorney Haskell’s attitude. As such, he is happy to review your financial records with you. He is happy to give you his opinion on whether or not those records are sufficient to withstand an audit. He is happy to tell you how to do a better job of keeping records in the future. He is even happy to prepare your taxes based up receipts and bank statements or to become your record keeper (albeit for a fee). Attorney Haskell has a number of clients who have decided that it is easier to hire him, not only as their tax preparer, but also their bookkeeper than it is to keep their records themselves. For these clients the relationship usually evolves into something even broader. Attorney Haskell tends to become the back office for the company as well as the company counsel.
The seventh tip is “Make sure the preparer is available after the filing due date.” Specifically, is the tax preparer somebody you can find after April 15 if you have a problem? Attorney Haskell has had clients come to him to prepare their taxes because they have had problems in the summer time and their previous tax preparer was nowhere to be found. He has had clients come to him during the off season specifically because they are having problems and they cannot locate their tax preparer. They wind up having to hire Attorney Haskell to fix something that their tax preparer should have simply taken care of. Attorney Haskell’s clients do not have this problem as he is a practicing attorney who is open year round.
The eighth and ninth rules are “Review the tax return and ask questions before signing.” and “Never sign a blank tax return.”
Tips eight and nine relate to one basic theme. You may hire a tax return preparer to do your taxes. You may rely upon that preparer’s advice in doing your taxes. However, you are responsible for the content of that tax return. As a result, signing a blank tax return or signing a return without reviewing it is foolhardy. Attorney Haskell or a member of his staff review every tax return with every client before it is filed. Usually, Attorney Haskell does this review personally. However, if the return is simple and he is unavailable, then a member of Attorney Haskell’s staff will sit down with the client and go through the return. Part of this is to protect Attorney Haskell. He certainly does not want a client ever saying that he did not tell them that he was doing something. However, part of this is also to protect the client. Although Attorney Haskell has great confidence in the accuracy of the returns that he drafts and clients rarely change them, he finds that it is useful to have the client’s eyes on the return. After all, Attorney Haskell is merely reporting what the client reported to him. It is possible to misunderstand. The client has lived this experience. Therefore the client’s insights are useful to Attorney Haskell. Attorney Haskell cannot think of a valid reason why a return preparer would want to file a tax return that a client has not reviewed. He can think of a number of invalid reasons.
That leads to the final tip “ Preparers must sign the return and include their PTIN as required by law.” A tax preparer who does not want you the review the return probably does not want to put his own name and identification number on the tax return either. All paid tax return preparers are required to provide their name and PTIN number to the client and to the Internal Revenue Service. If a preparer is filing a paper return, the preparer is required to sign it. E-filing the return on a professional tax software program (not TurboTax) gives the Internal Revenue Service the preparer’s electronic signature. If a paid return preparer is unwilling to put his or her name on the return, it is because the preparer is not proud of its work. To the contrary, it indicates that the preparer has done a substandard job, and is probably engaged in tax fraud. This is not farfetched. Attorney Haskell used to have a preparer in his building who did not put his name on the returns. He used to brag that he got the biggest refunds of anybody out there, but he also used to make up numbers. He used to take deductions that were blatantly illegal. Attorney Haskell has had a number of clients come in that are now in trouble because of the returns that this man filed. However, his name is not on the return. The Internal Revenue Service is not coming after him. He denies having any involvement with these clients. The Internal Revenue Service says that the clients are responsible for the errors on the return and they need to pay back those refunds with interest and penalty. Of course the refunds have already been spent, and in general the Internal Revenue Service is looking for not simply last year’s refund, but three years of refunds. Every return filed in Attorney Haskell’s office has Attorney Haskell’s name along with all of his identifiers, including his e-signature on it. They are all designed to get you the largest refund allowed by law, but are also designed not to get you in trouble.
Representation Rights
The Internal Revenue Service has dedicated more than half of this flier to the issue of representation rights. This is because the rules have changed this year. For lawyers, such as Attorney Haskell, CPAs and enrolled agents, the rules have not changed. They have what are known as “unlimited representation rights”. That means that they can represent anyone before the Internal Revenue Service and they can represent them at any level within the Internal Revenue Service. That is to say, someone who hired a plain vanilla or “unenrolled” preparer can hire Attorney Haskell if they have been audited, or if they have a collections issue. He can not only represent them before the revenue agent or customer service representative, but can represent them in the collections process, in an appeal and in a full blown audit. Attorney Haskell has taken it a step further, and is a member of the Tax Court Bar. As such, he could actually take a fight with the Internal Revenue Service into the federal courts.
What has changed is that in the past all tax preparers, including unenrolled preparers, had at least limited representation rights. That allowed them at least to take care of their own customers in dealing with a revenue agent or customer service representative. Although they were in the habit of saying that they offer “audit defense” it was an audit defense within limits. They were never allowed to handle collection issues and were never allowed to represent a customer in an Internal Revenue Service appeal. As such, it was easy for them to advertise “free audit defense” because, by law, they were so limited in what “audit defense” meant.
Now the unenrolled preparers are broken down into two groups. There are some who participate in an annual filing season program and they still have these limited representation rights. They will continue to advertise “free audit defense” because they continue to be able to provide limited audit defense services. As before, however, they cannot handle any kind of appeal within the Internal Revenue Service beyond the initial meetings with the revenue officer and cannot help out in collection matters. Most unenrolled preparers will have no representation rights whatsoever. That means that if you have any kind of a problem with the Internal Revenue Service, no matter how small, it will be necessary to hire an attorney, CPA or enrolled agent to handle it for you.
Previous Tip Sheets
The Internal Revenue Service puts out a tip sheet like this one every year. Previously, the tip sheet said to research the tax preparer’s background. This is particularly good advice as being a tax preparer is not the same as being a licensed professional. The IRS attempted to make a requirement that tax preparers actually have some education and pass a test, but that was struck down in court.
When Attorney Haskell’s wife first started preparing taxes in his office, she obtained her own PTIN number. As such, she was a licensed tax preparer. However, she was able to obtain her PTIN number specifically because she was supervised by Attorney Haskell. However, she was not given an Electronic Case Filing “ECF” number which would allow her to e-file returns independently. Although she has been extensively trained to prepare tax returns, the IRS does not know that. Her education and training was not part of the criteria for giving her a PTIN number. She did have to pass a criminal background check, and Attorney Haskell had to certify that he was supervising her. That was all that was required for her to get her PTIN number and become a licensed tax preparer. A year later, she applied for and received her very own ECF number. She received her own ECF number even though she filed no returns under her own name or PTIN number. They all went out as returns prepared by Attorney Haskell. With an unknown amount of experience and training, Attorney Haskell’s wife was given everything that she needs to go out and start her own tax business. Attorney Haskell’s wife may, on her own and without Attorney Haskell, prepare and e-file tax returns. The fact is that she is completely qualified and capable. However, the IRS does not know that. They merely assumed, correctly in this case, that Attorney Haskell had provided her the requisite training and experience.
As such, though a person may have a PTIN and an ECF number, that does not necessarily mean that they know what they are doing. The IRS would like to change that, but they have not been allowed to. What is more, if you have a tax preparer who is not e-filing (or using a consumer program like TurboTax, or e-filing through the Internal Revenue Service website), then that probably means that they do not have an ECF number. That would mean that they have not met even the very low standards set by the IRS for who qualifies for an ECF number.
As for Attorney Haskell, he is a licensed attorney. He studied the Internal Revenue Code in law school and has been studying it ever since. What is more, he can read the Internal Revenue Code in ways that most tax preparers cannot. He has had any number of conversations with experienced licensed tax preparers who have told him how they handle various situations, and then read the IRS publications only to see that they have been doing it wrong. For example, Attorney Haskell posted a blog on when married people can file as head of household. He posted that blog, specifically because a very experienced tax preparer had said to him that same day that a married person can never file as head of household. He has put up other posts. Attorney Haskell subscribes to the various IRS services that update tax professionals on what is happening with the Internal Revenue Code and with the IRS. When the changes are important, he blogs on them. While Massachusetts does not have a continuing legal education requirement, New Hampshire does. Attorney Haskell is licensed in New Hampshire as well. As such, he is coerced into taking seminars and takes a number of tax seminars during the year. In addition he voluntarily follows what the IRS provides and various other publications for tax professionals. He often shares some of the more interesting, non-proprietary, internet publications on his Facebook page.
Another tip that appeared in past publications is to make sure that all refunds go directly to you and are not deposited into your preparer’s account. Attorney Haskell has two (2) stories about tax refunds directed into the tax preparer’s account. Attorney Haskell had a situation in his building a couple of years ago. A tenant came into his office and told him that another tenant, who happened to be a tax preparer, was fighting with a client. The tenant was uncertain if it was a physical altercation or not, as it was behind closed doors. The client had definitely threatened to kill the tax preparer. Being the hero that Attorney Haskell is, he called the police. It turned out that the tax preparer had “borrowed” the client’s refund, without permission. He was also not prepared to “pay it back” when the client found out.
Attorney Haskell had a client come in who was about to move to California. He was worried about how he was going to get his tax refund. Attorney Haskell suggested that he have it direct deposited into his bank account, but he did not have a bank account. For whatever reason did not wish to open one before moving to California. He suggested that the money be deposited into Attorney Haskell’s bank account and he declined. Attorney Haskell just thought that it was a terrible idea that can only lead to problems. Although he has handled tens of millions of dollars of other people’s money in his career, it is still something he would rather not do if he could avoid it. There is just too much opportunity for things to go wrong, or to be accused of having things go wrong. However, it does create a lot of great opportunities for thieves. Fortunately, the client knew his mailing address in California, so he had the refund snail mailed there.