California is one of the few states that require tax preparers to be
licensed or registered
SACRAMENTO, Calif.–(BUSINESS WIRE)–Verifying the legal status of a tax preparer may seem obvious, yet each
year too many taxpayers will make their choice on a whim.
“A lot of people get hooked on promises that sound good, but really have
no validity. More times than not, they end up in trouble because of it,”
said Lester Crawford, chair of the California Tax Education Council
(CTEC), a state-mandated nonprofit organization that manages the
registration of more than 40,000 unlicensed tax preparers.
Unlike most states, California has set standards for paid tax preparers.
California law requires anyone who prepares tax returns for a fee to be
either an attorney, certified public accountant (CPA), CTEC-registered
tax preparer (CRTP) or enrolled agent (EA). Each professional tax
preparer must pass an initial test and follow educational requirements.
Anyone caught preparing tax returns without a legal designation is
breaking state law and may face penalties up to $5,000 from the
California Franchise Tax Board.
“The state can go after questionable tax preparers, but there is no law
that exempts the victim from any damage caused by them,” Crawford said.
“That’s why it’s so important to know who you’re dealing with.”
Although professional tax preparers are required to sign your tax return
to show proof of work, it is still you, the taxpayer, who is
ultimately responsible for all information listed on the tax return—no
matter if it is right, wrong or even fraudulent.
“Tax preparers who don’t sign tax returns are one of the biggest threats
right now. They’ve been dubbed as ‘ghost tax preparers’ because they
leave the taxpayer hanging without proof they even exist,” said Celeste
Heritage, CTEC administrator.
In addition to state rules, the Internal Revenue Service also requires
paid tax preparers to register for a Preparer Tax Identification Number
(PTIN). Tax preparers must include their PTIN on every federal tax
return they prepare for clients.
“Your tax return is one of the most important financial transactions
you’ll make this year. Why risk it with someone who isn’t legal?”
For more tips on how to find a California approved tax preparer or to
report ghost tax preparers, visit reporttaxpreparerfraud.org.
CTEC is a nonprofit organization that was established in 1997 by the
California State Legislature to protect taxpayers against fraud and
incompetent tax preparers. Taxpayers can report noncompliant tax
preparers at ctec.org.
California Tax Education Council
Gigi Jones, 916-296-6913