Making Cents: Be prepared when picking tax preparer

John P. Napolitano

As the tax filing deadline approaches, perhaps it is time for you to hire a professional tax preparer or replace the one that you've got. Most of the common do-it-yourself programs are pretty good these days, but there is no substitute for a professional to help you out in the gray areas.

The first criterion is competence. While there is no formal requirement for tax preparers in terms of education or experience, the IRS does make all tax preparers register with the government. If the person who you want to use is not registered, or refuses to register, keep shopping.

Most certified public accountants or enrolled agents are competent in tax preparation. While CPAs often have far more rigorous training than enrolled agents, don't assume that a CPA is a tax professional. Enrolled agents, on the other hand, must either prove to the IRS that their prior experience and training qualifies them to represent clients in front of the IRS or pass a three-part exam.  

A master's degree in taxation or an LLM (an advanced tax degree for lawyers) is also evidence of rigorous tax training.

Fees are another consideration when choosing a preparer. It is prudent to ask for a fee quote or range. In very complicated situations, a seasoned tax pro may be hesitant to quote a fixed fee, but instead offer an hourly rate with a fee range not to exceed a certain amount. If you are seeking a tax professional because you haven't filed in years, expect to pay a reasonably high retainer. This may be money well spent if you're a tax-filing delinquent.

If you already have a tax preparer, look for signals that it's time to move on. If you are automatically put on extension, that is not a good sign, unless you always have tax information from pass-through entities such as partnerships, trusts or S Corporations that is regularly late in arriving.  

If your situation is straightforward, and you get the information to a preparer by April 1, your return should be ready for filing by April 15.

If you get frequent notices from the IRS, or commonly find errors in the return, think about a switch. You might also consider a change if your preparer is very lax about the rules. A tax preparer who accepts estimates of deductions rather than demanding the required documentation may seem like your pal, but that person could land you in big trouble. Even if you hire a preparer, you are responsible for the information on your return, so choose wisely.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at