Top 7 Questions to Ask Your Tax Advisor

irs auditThe tax industry is ever changing. Tax professionals are subject to various federal and state regulations. The Internal Revenue Service is now requiring all tax return preparers to prove their competence to properly apply their tax laws.

Those preparers who are not already Enrolled Agents (EAs), Certified Public Accountants (CPAs), or Attorneys, are now required to take a test to allow them to become a Registered Tax Return Preparer (RTRP). No one can use this designation until they pass this test. EAs, CPAs and Attorneys have already demonstrated their competence by passing other comprehensive tests.

These brief descriptions give you a glimpse of what these professionals can do.

  • An EA, Enrolled Agent, is licensed by the Department of Treasury to represent taxpayers nationwide at all levels of the Internal Revenue Service. Some EAs also offer bookkeeping services.
  • A CPA, Certified Public Accountant, is licensed by their State’s Board of Accountancy to perform accounting services in that state. Those same Boards of Accountancy limit the use of the word “accounting” to their recognized CPAs. Some CPAs also practice tax.
  • Attorneys are admitted to their State’s Bar. Attorneys who are admitted to the Tax Court can represent taxpayers at that level of IRS Appeal.

Here are 7 questions you can ask to help ensure you find an experienced, trustworthy tax advisor:

  1. How long have you been in the tax business?
  2. What licenses or designations do you have?
  3. What tax issues do you specialize in?
  4. Do you have the knowledge and experience to handle my tax situation?
  5. Do you outsource any of your work?
  6. What’s your privacy policy?
  7. How do you charge your fee; how much will it cost?

It is important that you establish a comfort level with your tax advisor. You want to feel safe (and you want to feel your information is safe) in sharing your important and confidential tax return information with your trusted advisor.

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