Before setting up the appointment and starting your interview with your new possible CPA, you should always do a quick background check to ensure legitimacy. It is an unfortunate truth that there are many people out there with nefarious motives who pretend to be a CPA in order to ask for a higher rate or to steal your information.
With the tools below you can not only verify that they do indeed hold the CPA license, but you can also check to see if their license is active and if they have any legal issues against their license.
Resources to verify legitimacy and any legal issues:
- CPA Verify
- State Board of Accountancy Search for an Individual’s License: (Ex. for the state of California)
- State Board of Accountancy Search for a firm: (Ex. for the state of California)
1. Do you have a PTIN (Preparer Tax Identification Number)?
This should be your first question with any CPA or licensed tax preparer. Anyone who prepares tax returns must have a PTIN in order to submit it through the IRS. Without a PTIN the individual cannot actually submit the prepared return and should not pretend to be able to do so.
2. Who will actually sign my tax return?
This is another very important question and ties into the previous question about the PTIN. The PTIN and the preparer’s signature needs to appear on your tax return. Do not trust anyone who refuses to sign your return. If the preparer or service provider will not tell you in advance who will actually be preparing and signing your return, take that as a sign to end the conversation and find someone else.
3. Are you, or is your firm, licensed in this state to practice public accounting?
Every firm that has the letters “CPA” in it is required by law to be licensed in public accounting by their state board of accountancy. However, there are many “CPA” firms that operate without the “CPA” in their name. For example. A firm called “John Doe and Associates”, may offer Tax Services but may not be held accountable by their state’s board of accountancy. This loophole allows a licensed individual with a PTIN to provide tax services under a firm that is not held to the standards of licensed CPA firms in that state.
4. What types of clients do you work with?
This is a good probing question and the answer you may hear is that they work with all types of clients and industries. If you get this vague answer, ask again if they have a deeper experience in a type of client (i.e. are more of their clients in the service, product or manufacturing industries). CPA’s sometimes have a certain type of client they work with that they are familiar with. Try and use this question to narrow down what the CPA’s experience and preferred client base is. You may find that they are perfect for you, or that they would rather not work on your tax situation.
5. What is your tax background and/or specialty?
This is a very important question that can be combined with the previous question. Everyone’s tax situation is different and not every CPA is cut from the same cloth. You will find that some CPA’s focus only on simple W-2 taxation, others work only on international and foreign tax situations, others are specialized in corporate taxation. In this case, you may be able to determine early on that the CPA you are talking to is not a good fit, simply because you are looking for a CPA with corporate tax experience and they only work with W-2 Individuals.
6. How do you determine your rates?
This is an important question to pay attention to. The reason is that many CPA’s are not the best at providing a clear price and timeline for your tax return. For example, you will run into a lot of CPA’s who say that your return will cost a certain rate and will be done on a certain date. However, they often will get overwhelmed with tax season and get behind. This causes many returns to become extended or late on the date previously mentioned. In many cases, the CPA will tack on all of those billable hours that you forgot about and any extra work they were not prepared for upon completion of the return. So what you have is someone who was told they would pay $900 and will be done in two weeks and that turns into a $2,200 return that was two weeks late.
7. Are you a cloud-based firm or a paper firm?
This question is dependent on you. If you would like a more remote relationship with less paperwork to deal with, you may want to find a CPA who operates in cloud-based software and is tech savvy. This question is important for you to ask as there are a lot of CPAs who are not tech savvy and have not moved away from paper yet. However, if you like the pile of paper and want to sit with your CPA as they do your return and have a very hands-on relationship, this is a good question to ask to determine your CPA’s style.
8. What happens if I get audited?
This is a great question to ask because there are a lot of tax preparers out there who only prepare tax returns and will not provide ongoing support. If you have a serious issue, like being audited by the IRS, you want someone who is willing to stand by with you and represent you in front of the IRS or Tax Court. CPA’s, EA’s and Tax Attorney’s are the only people allowed to represent you in court in front of the IRS, but this does not mean they would be willing to.
9. Who will actually be doing the work on my tax return?
Unfortunately, there has been a growing trend in the industry that is not as beneficial for you as it is for the firm. Many CPA firms are turning to outsourced workers from other countries. You may find that firm you are talking to has a lot of their work done by an outsourced company overseas. The decision is up to you, but I would want the person I am speaking with, or a licensed professional in the firm who I could speak to, work on my returns.
10. What tax software do you use to prepare returns?
I hate that this question has to be asked, but there is a growing number of CPA’s/Firms using the consumer Do It Yourself (DIY) software platform such as Intuit’s Turbo Tax to file returns for their clients. This is a big red flag, if the person you are looking to hire for your return is using the same software that you can pay $40 and do yourself, they are not someone you want to be handling your taxes. Their experience, expertise, and professionalism are what should be guiding the work being done of your return, they should be using professional tax software such as Lacerte, ProConnect, Drake, Thomson Reuters Ultra Tax CS.
11. What is your typical turnaround for tax returns?
The industry standard for many small firms is 2-3 weeks from the time your documents are received during the height of tax season. Many firms have a policy of extending all tax returns if the taxpayer does not get to them all their documents by April 1st. However, some firms are able to manage their timetable to a more efficient turnaround and ensure their clients with few exceptions are filed on time. Understanding your own personal goals and tax situation will help you decide if this policy is something you can live with or if you need to find a tax preparer that can fit you in at last minute.
12. Does the fee to prepare my tax return include tax advice throughout the year?
This is an important question because it puts all the cards on the table and helps you both understand what is expected. Unless otherwise offered, it is widely understood that your tax return preparation fee includes minimal advice up to the point of filing your annual tax return plan. If you feel you will need or want quarterly or annual tax planning and advice, consider seeking the services of a Tax Planning expert.
13. What do you expect from me each year?
This is an important question because understanding what the CPA expects from you means that you will most likely provide them with the information needed to provide accurate, efficient services. You will always be expected to provide complete, honest records and answers on time, however, each CPA and firm has supplemental expectations for their clients, and if left unsaid, can lead to unsatisfactory returns or clients.
It is always better to do your due diligence at the beginning of your relationship with your CPA. You do not want to end up with poor service, a CPA who doesn’t have the experience or expertise for your tax situation or get involved in an identity theft situation. Use a list like this to ensure that you are getting the type of service that you need, want and deserve.