What to Look For When Hiring a Tax Consultant

By Suzanne Smither , last updated December 29, 2011

Honesty, a sterling reputation, the right credentials and a solid track record are essential when hiring a tax consultant. So-called advisers who promise to get you a huge income tax refund, while charging less than anyone else, have nothing but entertainment value to offer. Whether you’re looking for a consultant to help you file your individual income tax return or keep your business compliant with tax laws throughout the year, check the backgrounds of several candidates and determine who best meets the accepted professional standards in the field.

Income Tax Consultants

These experts do more than simply fill out your forms as the income tax deadline nears. They'll also research and explain your tax issues, keep you or your business compliant with ongoing tax obligations, and help you minimize your tax liability. Although many consultants are Certified Public Accountants possessing at least 150 credit hours of undergraduate and/or graduate education, the credential that applies most directly to tax work is that of Accredited Tax Adviser. ATAs must demonstrate advanced knowledge in complex tax planning subjects by passing a 100-question exam, and should have worked at least five years in a tax-related profession, doing tax planning and consulting at least 40 percent of the time.

A trustworthy professional will also abide by the Code of Ethics of the National Association of Tax Consultants (http://www.natctax.org/ethics.php), which requires obeying all state and federal laws regarding tax preparation, continuing one's education to keep current with laws and developments in the field, and "maintaining the highest standards of honesty, integrity and confidentiality in all relationships with clients, keeping as the utmost concerns the client's best interest."

Choosing a Tax Preparer

If preparing your income tax return is the main task you have in mind for your tax consultant, think ahead. Since only attorneys, CPAs and Enrolled Agents can represent taxpayers before the IRS in case of audits, collections or appeals, it's best to have one of these professionals in your corner from the start. The IRS licenses Enrolled Agents who pass a thorough background check and have either passed a qualifying exam or worked for the IRS for at least five years, regularly interpreting and applying the tax code and regulations.

The IRS (http://www.irs.gov/individuals/article/0,,id=133088,00.html) offers these tips for choosing the right tax preparer: Make sure he has a Preparer Tax Identification Number and includes it when signing your return. Check his record with the Better Business Bureau, and check for disciplinary actions with the appropriate agency: a CPA's state board of accountancy, an attorney's state bar association, or the IRS Office of Professional Responsibility for enrolled agents. Choose someone you can consult year-round, not just until the tax filing deadline.

Expect to be asked for records and receipts, and welcome questions about your income, expenses and deductions, advises the IRS. But avoid anyone who requests a percentage of your refund or claims she can get you more money back than other preparers can. Finally, read all forms before signing, and get copies. No matter who prepares your return, you're responsible for its accuracy.

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