TAX NEWS - JUNE 2010

7 Tips for Hiring a Tax Pro

by Joseph Anthony -- I used tax professionals before I became one, so I've been on both sides of the desk that separates professional from client.

I think you should interview a tax pro before you hire him or her — just as you'd interview a lawyer, architect, doctor or any other professional. Sure, you're not an expert in the field, but you can still learn a lot and at least screen out some candidates with an initial meeting.

Your interview goals? You want to determine not only how the tax pro's business meshes with your needs, but also whether you'll have a good emotional "fit" or comfort level.

Here are seven questions I would ask a tax pro before hiring him or her:

1. What kind of credentials do you have? Tax pros usually are certified public accountants (CPAs), enrolled agents (EAs) or unenrolled preparers. CPAs by definition are public accountants; many focus on tax issues, but some specialize in other areas. Most CPAs are licensed by the states, and have broader powers with regards to IRS audits than unlicensed CPAs (public accountants who have passed the Uniform CPA exam but have yet to receive a state license). EAs are licensed by the federal government and so by definition specialize in tax issues. Unenrolled preparers are, basically, everyone else. They may or may not have had any formal training.

2. Do you have an area or type of client in which you specialize? You're looking not just for a tax pro, but also for someone who is very familiar with and hopefully an expert in the issues affecting you. An EA who spends most of his time handling audits may not be right for you if your main reason for hiring a professional is that you have several real estate investments. A CPA who handles returns for trusts or large businesses isn't likely to be the best fit if you have a small business with a handful of employees. Both tax pros could be qualified to handle those returns, but you'll probably be happier with someone whose client base is similar to your own profile.

3. How much professional education do you get annually? Just passing the test to be a CPA or an EA isn't enough. With the tax code and interpretations of the code changing every year, continuing education is really essential. EAs are required to have 72 hours of continuing education in a three-year period; each state sets its own requirements for CPAs. In Oregon, for example, CPAs must take 80 hours of continuing education within a two-year period. Many tax professionals I know take more than the minimum requirement for continuing education. Although more training doesn't necessarily mean the tax pro will be superior, it's certainly not a bad sign.

4. Who will I be interacting with? Many tax firms assign more than one person to a client's return. You probably don't need to know how the "back room" operates, but you do want to know if the person you're interviewing is the one who will be able to answer your questions about your return.

5. What's your policy on returning phone calls? One of the complaints I hear most often from consumers about their tax pros: "She doesn't return my calls." What can I tell you? Tax pros aren't famous for their communications skills. It's not unreasonable to ask how long you should expect to wait to have a call returned. Asking also lets the tax pro know that you do want your calls returned.

6. Are you available outside of the tax season? Some tax preparers are seasonal: They are available only the first four months of the year, or their offices are closed for a few months each year. If you expect year-round access, you need to make sure the tax pro will be available.

7. How much are you going to charge me? Don't be afraid to discuss fees. After all, it's your money. Tax pros may bill by the hour, the form, the overall return or some combination. After reviewing your previous returns and interviewing you, a tax pro should be able to give you a good-faith estimate of costs.

Joseph Anthony is a tax professional in Portland, Oregon, who writes about finance and tax issues affecting small businesses.