The other day I saw a guy on a street corner with a guitar and dressed up funny advertising for a major tax preparation chain. He had a sign that said something about getting $50. It was implied that somehow this preparer was going to give you $50 or get you an extra $50 refund on your taxes. Hogwash.

It has always been a bone of contention for me that people think tax preparers decide how much of a refund that you get on your individual returns. Folks, your refund is determined by how much you had deducted from your earnings during the year and how much your various deductions and credits reduce your tax liability. A good preparer can help you find missed deductions and credits you otherwise might miss but he or she cannot determine how much you obtain for a refund.

The Columbian has an article today about the importance of choosing a good preparer. I once represented, in an IRS audit, a very nice couple who went to a tax preparer because a friend told them that the preparer had a tax shelter that would substantially reduce their taxes. Well it turns out that the preparer was identified as someone who was getting people to sign up for a fraudulent tax shelter. The IRS not only went after the preparer, they also went after the clients of the preparer.

My new client ended up having to pay back all the taxes saved, plus interest, plus penalties. Since the IRS takes a couple years to sort out these kind of messes, the penalties and interest ending up doubling the actual amount that would have been owed had the nice couple never used this preparer.

Take the Columbian’s good advice and don’t fall for this:

Does the guy who does your income tax boast that he can get bigger refunds than anyone else?
Does your tax preparer say she’s so good that her fee is based on a percentage of how much she gets you?
If so, you may be cruisin’ for a bruisin’, says the Internal Revenue Service.

If it sounds too good to be true, it is.

By the way, people often go to the national preparer chains thinking their fees are more reasonable. This is not necessarily the case. I would be glad to quote your fee in advance once reviewing your tax materials and you can see for yourself if this is true. And with my services you are getting someone that has been doing this successfully for a very long time. Can you be sure that is the case when you go to a retail tax chain?