Do This First…
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 more money or to steal your personal information.
Using the tools below you can verify that they do indeed hold the CPA license, check to see if their license is active, and see if they have any legal issues against their license.
Resources to verify legitimacy and any legal issues:
Every firm that has the letters “CPA” in its name is required by law to be licensed in public accounting by their state board of accountancy. However, there are many accounting firms that are not CPAs.
For example, “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.
If you choose not to hire a CPA or CPA firm, this should be your first question with any licensed tax preparer. It is legally required that anyone who prepares US tax returns for a fee must have a PTIN. This is required to be updated annually.
Without a PTIN the individual cannot actually submit the prepared return and should not pretend to be able to do so.
One way to verify if the business or individual that you have used in the past has a PTIN and can ethically and legally prepare tax returns is to look at the signature block on your prior year(s) return(s). In the “Paid Preparer Use Only” Section, it should be signed, dated, and include their unique PTIN. If it says “self-prepared” and you paid them to prepare and submit your past return(s), they may not have been legally able to do so as they might not be registered as a “tax preparer” with the IRS.
This is a personal preference question. 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 not all CPAs have strong technology skills so they continue to rely on paper. If you also prefer to handle paper and want to sit with your CPA as they do your return and have a very hands-on relationship, asking this question will help you find a CPA that fits your style.
For many small tax firms, it is customary to have an “in-person” tax interview. This style has been widely adopted by the H&R Block, Jackson Hewitt, and Liberty Tax franchises as well.
This practice means that you will schedule an appointment and spend an hour or more going through all your documents with the tax preparer. They will ask all their questions on-site, prepare your return and you will walk away with your prepared and submitted return.
The upside to the interview is you have your return much quicker, however, it consumes your time and generally means you have to schedule it during your working hours. The downside is that there is no review process for the preparation. One person prepares, reviews, and submits your return, which means it can be prone to human error. If your tax firm does not provide “in-personal interviews”, it generally means that there are at least (2) sets of eyes on your return. One prepares and the other reviews for accuracy and completeness, looking to reduce the human error component as well as to look for missed tax deductions or opportunities.
This, again, is a personal preference. Do you have the time to sit and wait while your return is being prepared? Or do you prefer to drop off your documents (or upload them to the cloud) and be notified when it’s been completed?
Similar to the last question, unless it is an “in-person tax interview”, the person you spoke with might not be the person who prepares your return. The “preparer” may be an accountant within the same office or they may be outsourced or working remotely. With the high costs of staffing and inflation in the US, some CPA firms have turned to outsourcing some or all of their tax/accounting work to foreign entities. There are reputable, experienced, and secure companies that provide such outsourcing. For example, the Big 4 Accounting firms operate worldwide and often will outsource or hire CPAs that hold international-based CPA licenses.
However, it is ultimately the responsibility of the CPA firm that you hire to safeguard your data and ensure that your returns are prepared accurately and completely.
Ask the CPA firm if they do in fact outsource any of their services to foreign service providers (or software companies). If they do, ask them how they can ensure your data is protected and that your returns are completed with the same US-based standards. Also, ask if all individuals who might work on your return are licensed and have a PTIN.
This is another very important question and ties into the previous question about the PTIN.
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.
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 provide all their documents by April 1st.
However, some firms are able to manage their time to ensure a more efficient turnaround, so that with few exceptions client returns 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 the last minute.
This question is important because many CPAs are not the best at providing a clear price and timeline for your tax return. For example, a CPA may say that your return will cost a certain rate and will be done on a certain date.
However, if they get overwhelmed with tax season and fall behind, this will cause many returns to be extended or to be completed later than the date promised. Also, in many cases, the CPA may tack on billable hours that you weren’t aware of plus hours for any extra work they were not prepared for upon completion of the return. So you may have been told you would pay $900 and your return would be done in two weeks, but you get a $2,200 return that is two weeks late.
This is a very important question because it puts all the cards on the table and clarifies expectations. 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.
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 you and represent you in front of the IRS or Tax Court.
CPAs, EAs, and Tax Attorneys 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. Ask upfront so you won’t be let down later.
Understanding what the CPA expects from you allows you to provide the information they need to serve you accurately and efficiently. 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. If left unsaid, these can lead to unsatisfactory returns or unhappy clients.
Of course, you want to take as many deductions as you can to minimize your taxes, but not all CPAs approach this the same way. Some believe in writing off everything possible, and others are more conservative. Ask how the CPA you are considering approaches deductions.
This is a very important question that relates to the previous question. Everyone’s tax situation is different and not every CPA is cut from the same cloth. You will find that some CPAs focus only on simple W-2 taxation, others work only on international and foreign tax situations, and 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 who only work with W-2 Individuals.
This is a good probing question. If you get a vague answer – they say they work with all types of clients and industries — ask if they have a deeper experience with a particular type of client (i.e. are more of their clients in the service, product, or manufacturing industries). CPAs sometimes specialize in the types of clients they work with, so they are more familiar with those types of businesses.
Use this question to clarify the CPA’s experience and preferred client base. You may find that they are perfect for you, or that their experience with your business type is minimal, or that they would rather not work on your tax situation.
This question also relates to the two previous questions. The bigger your business, the more complex your tax situation is likely to be. A CPA who typically works with small “mom and pop” type businesses may not have the expertise to handle complex tax accounting, while a firm that typically serves high-revenue companies may not want to deal with your small business taxes.
Some CPA firms use consumer-grade Do It Yourself (DIY) software platforms such as Intuit’s TurboTax or Taxslayer 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 you can buy for $40 and use yourself, they are not someone you want to be handling your business taxes. Look for a CPA who:
It is always better to do your due diligence before beginning a CPA relationship. Asking the questions listed above will help you decide which CPA has the right expertise, experience, and style for you. Check out our blog to find additional information and advice about taxes and accounting for your business.
This post was originally published in 2018 and has been updated for accuracy in 2022.
This publication is designed to provide information on federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.