February 19, 2013 — Sacramento– The Franchise Tax Board (FTB) and the California Tax Education Council (CTEC) remind California taxpayers who use a tax professional to make sure they have the proper information to choose one carefully.
CTEC, a non-profit corporation established by the California legislature, and FTB have partnered to educate taxpayers about tax preparer’s legal responsibilities, and to make sure those preparers are complying with the law. While more than 41,000 registered tax preparers are ready to assist California taxpayers, some operate outside the law and run the risk of penalties for themselves and their clients.
FTB advises taxpayers to avoid tax preparers who:
- Claim they can get larger refunds than other tax preparers.
- Base their fee on a percentage of the refund amount.
- Refuse to sign the tax return as the paid preparer even though it is required by law.
- Do not provide a copy of the tax return for the taxpayer’s records.
FTB Publication 982, How to Select an Income Tax Return Preparer offers more guidance on choosing a tax professional. Taxpayers should make sure their preparer is a licensed CPA, enrolled agent, attorney, or a registered tax preparer.
The following organizations provide information about licensed and registered tax professionals in California:
- California Board of Accountancy dca.ca.gov/cba.
- California Society of Certified Public Accountantscalcpa.org.
- State Bar of California calbar.ca.gov.
- California Society of Enrolled Agents csea.org.
- California Tax Education Council ctec.org.
California requires anyone preparing state and federal tax returns for a fee and who is not an attorney, CPA or enrolled agent to register as a tax preparer with CTEC. Each CTEC-registered tax preparer must complete courses on federal and state tax laws each year, plus obtain a $5,000 surety bond to protect clients against fraud.
Unregistered tax preparers are issued a $2,500 penalty, which doubles if the individual continues to prepare returns. Last year, FTB assessed 122 tax preparers with penalties for failing to be properly licensed or registered.
If taxpayers suspect a tax preparer is fraudulent, they should inform FTB online at ftb.ca.gov by selecting “Report Tax Fraud” under the online services, or by calling 800.540.FILE (3453). If a tax preparer cannot be verified as either an attorney, CPA, CTEC-registered tax preparer, or enrolled agent, consumers are asked to fill out a “Noncompliant Complaint Form” at www.ctec.org.
Source: State of CA Franchise Tax Board