If you participate in USDA programs, it’s time to start preparing to file your taxes. In this Ask the Expert, Dr. Tamara Cushing answers questions about choosing a tax professional. Dr. Cushing is an Extension Forest Business Specialist from the University of Florida who works to educate landowners, foresters and tax professionals about the economics of growing trees, tax interactions with forestry and landowner succession.
What Qualifies Someone to Complete Your Tax Return?
- Here are some qualifications to look for: A degree in accounting and possibly in taxation; maybe a law degree.
- Certification by a state licensing body or the Internal Revenue Service (IRS). This may include CPA, Licensed Tax Consultant (LTC), Licensed Tax Preparer (LTP), Enrolled Agent (EA), and tax attorney. Also, some Certified Financial Planners (CFP) can provide tax services. Some states require paid preparers to have specific qualifications to complete state tax returns and some don’t. Qualified, licensed and or certified tax preparers may be found through various locations some of which will be discussed later in this Q&A.
- Some preparers may not hold educational or other professional credentials but are IRS-authorized. These preparers will have a PTIN (Preparer tax identification number) and complete continuing education courses required by the IRS and or state regulatory agency.
- All preparers should have a PTIN.
Here are some questions to ask before committing to a tax professional.
- What services do you provide?
Not all tax return preparers perform everyday accounting functions, nor can they prepare all tax return and form types. Determine your needs, and then find out if the accountant or tax preparer can meet them.
- If I’m audited, will you represent me?
Not all preparers are able to represent a client in Tax Court. The following licenses/certifications can represent a taxpayer “in front” of the IRS: Certified Public Accountants (CPA), Enrolled Agents (EA) who have passed IRS examinations to become Tax Law Specialists, and Tax Attorneys. The following license or certification holders have limited rights representing a taxpayer: Annual Filing Season Program (AFSP), and holders of a Preparer Tax Identification Number (PTIN).
- How will I be charged?
You may be charged a flat fee or by the form. It is also possible you will be billed for time answering questions through email or phone calls. It’s important to ask.
- Are you available throughout the year for consultation?
While the immediate need is this year’s tax return, ideally you would be able to talk to your tax preparer during the year about decisions that will affect future tax returns.
Are there any specific considerations for farmers, ranchers, and/or forest landowners?
It is important to find a tax preparer who is familiar with your businesses. Tax provisions for farming and forestry are specialized and not all preparers will be familiar with the intricacies of a farm, ranch, or forest operation. Ask about their experience with other farmers and landowners, and with properties of similar size and revenue level. It is also important to know whether they have experience filing returns that may include income averaging (Schedule J), feeder animals, breeding livestock, direct-to-consumer sales, USDA program payments, crop insurance, timber sales, reforestation, and casualty losses.
You may not be able to find an accountant or tax preparer with extensive farm and forest operations experience. In this case, you should consider asking how they handle unfamiliar issues. This way, you hope to learn how they handle situations outside their normal operations. Are they willing to attend continuing education on farm- and forestry-related taxation or review printed material on the subject? The provider may have a more experienced colleague whom they can ask for assistance. You may need to connect your farm advisor or forester with the tax preparer.
Where Can I Look for an Accountant or Tax Preparer?
Here are some suggestions for where to find potential accountants and/or tax preparers.
- Ask other farmers, ranchers, and forest landowners.
- Ask a resource professional. Your farm advisor or forester may know tax preparers who work with other farmers or landowners and are aware of issues specific to these types of enterprises.
- Professional groups and organizations representing tax professionals, such as the State Bar Association, CPA associations, and EA associations, may provide lists of their members.
- In many states, CPAs, CFPs and others may be required to register with the state licensing board for accountants/tax preparers.
- The Internal Revenue Service has a directory of federal tax return preparers: https://irs.treasury.gov/rpo/rpo.jsf.
More information about taxes and USDA programs, including the new Tax Estimator Tool, is available at Taxes and USDA Programs | Farmers.gov.
Kathryn Fidler is a USDA public affairs specialist.