FTB Reminds Taxpayers to Select Tax Preparers Wisely
Released February 25, 2008
The Franchise Tax Board today reminded the more than 9.7 million taxpayers who use tax preparers for the income tax filing season to make sure their preparer is a qualified tax professional.
“Taxpayers are responsible for errors made on their tax returns even if they are made by a tax preparer,” said Controller John Chiang. “If you use a tax preparer, make sure you are dealing with a qualified, honest and professional one.”
State law requires preparers to be licensed CPAs, Public Accountants, Enrolled Agents, attorneys, or registered with of the California Tax Education Council (CTEC) in order to prepare income taxes for a fee.
The following organizations can provide more information on registered tax professionals in California:
- The California Board of Accountancy licenses CPAs and Public Accountants www.dca.ca.gov/cba.
- California Society of Certified Public Accountants www.calcpa.org.
- California Society of Enrolled Agents www.csea.org.
- California Tax Education Council www.ctec.org.
While honest tax preparers offer a valuable service to millions of taxpayers, dishonest tax preparers can manipulate tax returns to inflate expenses and deductions, claim unallowable credits or take excessive exemptions.
Last year, FTB investigators arrested four tax preparers on felony charges of filing fraudulent tax returns and FTB employees visited 715 tax preparation offices as part of their ongoing efforts targeting unlicensed tax preparers. Penalty letters were issued to only 91 unregistered tax preparers. Of those, 31 individuals complied and registered within the 90-day deadline, 28 stopped preparing returns, and 32 were assessed the $2,500 penalty for preparing tax returns without a license.
In 2006, 21 preparers were issued penalty letters. Eleven registered, six received the additional $5,000 penalty for continued non-compliance, and the remaining four stopped preparing returns.
The IRS and FTB have a brochure, FTB Publication 982, How to Select an Income Tax Return Preparer, where taxpayers can learn more about choosing a tax professional.
- Claiming they can get bigger refunds than other tax preparers. Someone unfamiliar with your financial situation cannot make such a guarantee.
- Basing their fee on a percentage of the refund amount rather than the complexity of the tax return.
- Filing schedules where the information is fraudulent or lacks documentation to support the income or deductions.
- Refusing to sign the tax return as the paid preparer or not providing a copy for the taxpayer’s records. The preparer is required by law to sign the return.
- Require you to sign a blank return or in pencil.
- The preparer is not properly licensed or registered.