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Tax preparers share advice about avoiding audits

Tax time. Ugh. It’s only six weeks away, and tax preparers want people to think about those taxes now, not in five-and-a-half weeks.

Dick Bayne, an enrolled agent who owns Bayne Bookkeeping and Tax Service in Merced, said this is the busy time of year for him. He sees people who come in unprepared for tax time and wants to help those folks. “The biggest problem I see is people not knowing the law and taking deductions that are not authorized,” Bayne said.

Small business owners need to be especially diligent, he warned. Too many times, business owners try to deduct expenses that aren’t business-related. “There are so many laws that people don’t think about,” Bayne explained.

Using an enrolled agent — as Bayne is — can also help people worried about being audited. An enrolled agent is tested and licensed by the IRS to represent taxpayers in front of the IRS. “The person who goes to an enrolled agent and gets audited never sees the IRS auditor,” Bayne said.

Often, IRS audits are random, Bayne said, so being prepared by using a good preparer is a must.

One of the most common problems that pops up in an audit is that the IRS hasn’t received all the documents it needs. “A preparer needs to make sure that all those documents are submitted,” Bayne said.

Along with enrolled agents, there are also preparers registered with the California Tax Education Council. Bill Geideman, chairman, said more than 40,000 tax preparers are enrolled in his organization.

“The law requires that anyone who prepares tax returns for money must have certain minimum qualifications,” Geideman said. The preparers enrolled in CTEC undergo 60 hours of courses in tax preparation, then 20 hours each year to keep up their knowledge, Geideman said.

Taxpayers need to make sure that the person preparing tax returns knows what he’s doing, Geideman said. “If you are paying for your tax return to be done, you sure want someone who knows what they are doing,” he said.

The only tax preparers exempt from the registration laws are enrolled agents, certified public accountants licensed by the state of California and lawyers.

Any enrolled agent who prepares a tax return for a taxpayer can represent that taxpayer in front of the IRS, Geideman said.

“People really need to use a professional — not just someone with a computer a tax program,” he said.

Bayne agreed. “You should have someone who knows what they are doing. You either pay now, or you pay later.”