The tax laws change every year, and more and more individuals are going to tax professionals for both individual and business tax consulting and return preparation. How do you choose a tax professional? What do you look for in how he will represent you and your interests in your dealings with the IRS. Many people see the need to use a tax attorney to resolve minor tax issues, and while they are normally well versed in current tax laws and their implementation they may be more than is required for most IRS contacts. A CPA, who most people see as the top of the list in representation, may or may not specialize in tax law and related representation. Enrolled Agents typically deal in all tax law matters, and are tested in and maintain education requirements in all areas of federal tax law application and representation.
I was engaged by a new client last week who opened and closed a new business in 2010, with a large loss. She went to a tax preparation firm for assistance and was told that if you had a loss, and did not make any money, you did not need to file the business return. While the client was skeptical about this advice they did not file a business return. They were recently contacted by the IRS regarding the missing return, with a penalty of $95 per partner for each month the return has been late. Not only will we need to work to resolve the penalty issue, and file a late return, but the business loss that was available to offset other income was not ever made available to these partners.
When choosing a tax attorney, CPA, or Enrolled Agent, talk to them, see what experience they have in matters that are the same as you are seeking advice on, and get a business relationship to develop and grow over time. No one will ever know your business and finances as well as you, and the professional you hire will work with you, as part of a team to resolve any tax related issues. Communication with the professional and how he responds to your business needs will determine the right fit for your business.