Description of What a Tax Preparer Does

Tax preparers can offer other services such as providing tax advice, processing tax refunds, and accounting or bookkeeping services.

Tax preparers engage in a variety of job activities. Many tax preparers work year-round providing accounting and bookkeeping services, providing representation of taxpayers in IRS and state tax board audits, providing business and tax consulting, processing state sales and federal excise tax returns, calculating and processing unemployment and FICA tax deposit and information returns, and requesting and interpreting official IRS advance letters or memorandum opinions from the IRS.

Client Interviews

Interviewing clients relative to their tax returns and providing tax advice are two of the most important roles of tax preparers. Sound tax advice is essential, not just to save clients money, but to ensure that clients avoid interest and civil and criminal penalties incurred as a result of rendering negligently incorrect advice and tax fraud. Tax preparers must also avoid conflicts of interest and adhere to ethical codes of professional conduct.

Researching and Interpreting IRS Rulings

Professional tax preparers must be knowledgeable about current laws and changes in tax laws. They must also know the procedures for requesting informal and formal IRS letters and memorandum opinions that may affect their clients. Tax professionals must know the IRS and state tax codes and administrative regulations, must keep strict confidentiality concerning their clients' financial and personal information, and must review all of the relevant tax forms and instructions that apply to their clients' specific circumstances.

Tax Accounting and Returns

Accurate financial records are required to competently prepare returns. Preparers must not only provide accurate records, but must also be able to document every tax deduction, tax credit and exemption.

Tax returns may serve multiple purposes. Tax information may be used for preparation of business plans and financial statements, soliciting investors, applying for credit, preparing budgets, making sound financial decisions affecting business operations, and preparing annual and quarterly reports to corporate shareholders.

Audit Representation

Accurate records are essential since tax returns may be audited. Preparers may be required to accompany taxpayers in the event of an audit. Tax preparers may be subject to interrogation by auditors in order to substantiate a client's legal position in relation to his returns. Thorough knowledge of current and past tax laws is also required to present a professional image to IRS auditors. Successfully documenting a client's returns can deter auditors from conducting future tax audits.

Client Confidentiality and Ethical Considerations

Tax preparers must maintain strict confidentiality concerning client records and personal information. A tax preparer must comply with IRS regulations and adhere to high standards of ethics in order to continue to represent clients in relation to federal and state income and other taxes. Continuing education courses are available to tax preparers in order to react to tax law changes. Professional trade association membership is another method of maintaining a professional reputation and connecting with other tax professionals.

References

• Occupational Info: Tax Preparers