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The state’s Franchise Tax Board and the California Tax Education Council Tuesday warned taxpayers who use paid tax preparers “to be cautious when choosing a professional.”
An estimated 65% of California taxpayers use a paid tax preparer, the groups said. Last year, the FTB assessed penalties on 113 preparers for failing to be properly licensed or registered.
This year, the Tax Education Council and the Franchise Tax Board are partnering to educate taxpayers about tax preparers’ legal responsibilities, and to make sure preparers are complying with the law.
The CTEC, founded under the state Legislature in 1997 to promote proficient tax preparation, is a nonprofit corporation that registers individuals who assist or prepare returns for a fee and are not licensed Certified Public Accountants.
CTEC-registered tax preparers must complete courses on federal and state tax laws each year, plus obtain a $5,000 surety bond to protect clients against fraud. Unregistered individuals are issued a $2,500 penalty, which doubles if they continue to prepare returns.
Other regulated tax preparers such as CPAs, EAs, and attorneys have their own industry requirements.
Taxpayers are cautioned to avoid tax preparers who:
• Claim they can get bigger 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 they are required by law to do so.
• Do not provide a copy of the tax return for the taxpayer’s records.
If taxpayers suspect a tax preparer is fraudulent, they should inform the FTB online at ftb.ca.gov by selecting “Report Tax Fraud” under the online services, or by calling 800.540.FILE (3453).
