The tax season can be daunting for many, and finding the right tax preparer is crucial for a seamless experience. In many states, it’s easy for almost anyone to claim to have the best tax preparation services, but California has taken steps to ensure that taxpayers can trust the professionals they hire.
California is one of the few states that have stringent regulations regarding tax preparation services. Taxpayers in the Golden State must ensure that the professional they choose to help them with their taxes is approved by the state.
State-Mandated Regulations
“Every year, many taxpayers make the mistake of selecting a tax preparer without verifying their credentials. This often leads to avoidable complications,” stated Margy Dunn, chair of the California Tax Education Council (CTEC). The CTEC is a nonprofit organization mandated by the state to oversee the registration of over 40,000 tax preparers who aren’t otherwise licensed.
In contrast to many other states, California has strict standards for those offering paid tax preparation services. By law, anyone who gets paid to prepare tax returns in California needs to be:
- An Attorney
- A Certified Public Accountant (CPA)
- A CTEC-registered tax preparer (CRTP)
- An Enrolled Agent (EA)
Any tax preparer operating without one of these legal designations is in violation of state law and can be penalized up to $5,000 by the California Franchise Tax Board.
“The onus is on the state to track and penalize these rogue tax preparers. However, if a taxpayer is harmed by one of these unlicensed preparers, the law doesn’t protect them from the repercussions,” warns Dunn. This makes it all the more essential for taxpayers to ensure they are hiring a legitimate professional.
Taxpayer Responsibility
While tax preparers have the duty of signing the returns they prepare to show accountability, it’s essential to note that the taxpayer is the one ultimately responsible for the contents of their tax return. This holds whether the information provided is accurate, misleading, or even fraudulent.
Celeste Heritage, CTEC administrator, notes, “Most taxpayers only start looking into the credentials of their tax preparer after they encounter a problem, which can be too late.”
Furthermore, beyond state regulations, the IRS mandates that all paid tax preparers obtain a Preparer Tax Identification Number (PTIN). This number must be included on every federal tax return they prepare.
“Your tax return is essentially a reflection of your financial activity for the year. It’s too important a document to entrust to someone without the proper credentials,” adds Heritage.
Final Thoughts
Before you hand over your financial details and trust someone with your tax return, make sure to do your due diligence. Check their credentials, verify their registration, and ensure they are in good standing with the state.
For more guidance on how to ensure you’re working with a reliable tax professional, visit Robert Hall & Associates. Remember, being proactive now can save you a lot of headaches down the road.
