Who’s doing your taxes – and can you trust them?

Ralph
00:00:00

Have you ever worked with someone you thought you could trust, only to realize later they weren't as competent or frankly, as honest as you believed? Tax season is stressful enough without worrying if the person handling your taxes is cutting corners, are they making mistakes or are they outright deceiving you.

Maybe they've made costly errors. Maybe they promised a big refund, only for you to be hit with penalties later. Or maybe they left you to deal with an IRS notice all on your own. The good news is you don't have to live in that uncertainty anymore. By the end of today's episode, you'll know exactly what red flags to watch out for when selecting a tax preparer and how to protect yourself from the pain of choosing the wrong person.
Today, I'm going to answer the question, who's doing your taxes and can you trust them?

Podcast Announcer
00:00:47

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:34:17

Well, thank you for joining me today on the Ask Ralph show. I am so glad you're here. Yesterday, we talked about how to choose the right tax professional. We're doing our tax week. We started off the week talking about, you know, do you need a tax professional?
Has your return reached the point where you need to work with somebody. Yesterday, we talked about how to choose that person. And today, we're going to talk about what to look out for and what red flags to be aware of if you've selected somebody. So yesterday, I explained the differences between CPAs and PAs and Enrolled Agents and Tax Attorneys.
We talked about, you know, Non-Enrolled Preparers and all that sort of thing. And I really shared with you a way to figure it out the best professional to meet your needs. So if you missed it, I'm going to encourage you to go check it out. You can catch all of our past episodes at askralph.com.
Well, today's listener question comes from Edmund and this is what Edmund writes. He says,
"Ralph, I've been using the same tax preparer for years, but I've started to notice some things that don't sit right with me. They never explain anything. They just have me sign the return and send me on my way. Last year, I got an IRS letter about a mistake on my return, and when I called my preparer, they didn't seem to care. I'm worried I might be in over my head, but I don't know what to look for in a better tax professional. How do I make sure I don't get burned again?"
Well Edmund, I hear you loud and clear. This is a situation I've seen far too many times in my career.
Trusting someone with your taxes is a big deal. I talk about this all the time when I meet with clients, it's almost one of the most intimate relationships that you have because you really need to share all of your financial information with them. You're putting all your financial information, you're putting all your personal data, and you're putting your peace of mind in their hands.
And when that trust is broken, much like a marital relationship, it can lead to real tangible pain. But listen Edmund, you're not alone in this. You don't have to stay stuck in this situation because today, we're going to walk through the biggest red flags to watch for, and I'm going to share some of my own experiences to help you avoid the same mistakes others have made.
Now, before I get started, I want to remind everybody, this show is all about answering your questions. Whether it's tax questions, saving, budgeting, or understanding biblical principles for managing money, I want to hear from you. Best way to get in touch with me is to just go to justaskralph.com and you can submit your questions there.
I also want to encourage you, something we started about a week ago, we now have the ability to support the show. And you do that by going to askralphpodcast.com/support. And I would love to see you do that. You go out there and you can buy me a virtual coffee and really that is used to just support the show and help us to reach more people with a positive message of how to improve their finances from a Christian perspective.
So as we're talking about a Christian perspective, let's get right to our scripture verse. I always like to ground ourselves in our conversation in God's word. And today's scripture verse comes to us from the book of Proverbs chapter 27 verses 23-24. This is what I use quite a bit and it says this. "Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations."
And you might be saying, Ralph, what does that have to do with selecting a tax preparer? Well, here's what it has to do with it. God calls us to be vigilant stewards of our resources.
And that means we got to pay attention to who we trust with our finances. And if we ignore warning signs of a bad preparer, it's like neglecting your flocks. Just like me here on the farm, if I don't pay attention to my herd of black Angus cows, we just went through a really cold spell and our automatic water that's supposed to work to 20 degrees.
Well, to be blunt with you, it didn't work till 20 degrees. So my farm hands had to be out there twice a day, filling up a big tub of water because these cows, they count on me. They can't go open the spigot and do it themselves. Well, that's what I'm talking about in this Bible verse. You can't neglect your herds.
If you do, if you get yourself in a position with a bad tax preparer, it can lead to unnecessary stress and then it can lead to financial loss. And that's not something you want.
Well, before I get to answer Edmund's question, I just want to share my gratitude statement for today.
And today I'm grateful for the work God has called me to do in helping others make wise financial decisions. Today's episode is a reminder that we don't have to settle for uncertainty. Just don't. God equips us with wisdom to take action and to be good stewards of what He has entrusted to us. So my goal today is to help equip you with wisdom so you can take action and be a good steward of what God has entrusted to you. So let's get started with that.
Well, let me tell you about a client I work with. Now, he's a small business owner named Brendon. Now Brendon had been using the same tax preparer for years. Brendon got to know this person. They'd worked together for years and years. And at first, everything seemed fine.
But over time, Brendon started to notice some unusual behaviors. The first thing he noticed is this preparer always, you know, had a nice office space. And then all of a sudden, Brendon got a letter that said, Hey, you know, I'm going to be working out of a different space. And then the next year, he was working out of a different space.
So he was not very stable. He was moving around. And then all of a sudden, Brendon went in for the next tax season. And he said to the preparer, he says, okay, my returns are done now. I need you to sign this so I can send them into the IRS. And all of a sudden the preparer said, listen, you know, I really don't sign returns anymore.
I switched to some different software and this software, you know, it just says self prepared on there, but Brendon, it's no big deal. Just go ahead and sign it and we can still electronically file your return or you can mail in. It's up to you. And then Brendon saw something interesting while he was sitting in the waiting area for his tax preparer,
it was a big sign up on the wall and it said, we get the biggest refunds for our clients. And he overheard a conversation. The secretary was having with somebody on the telephone and she was telling him about how they can get huge refunds for their clients. And Brendon just said that this really seems strange.
And then as he was checking in, the secretary was getting him ready for his tax appointment. She said, listen, I want to bring something to your attention, Brendon. In the past, we've taken checks and all that sort of thing. But now, you know the tax preparer only takes cash and we're not going to be able to give you a receipt.
Well, we're going to talk about red flags today. There's about a dozen of them there and see, this is the problem. About the pain that Brendon was experiencing. He trusted the preparer because they had been around, they did work together for years. And that's the problem. You get to develop this relationship with your preparer, which is a great thing.
I think I'm in the relationship business. When I meet with clients, I'm meeting with them. We're building a relationship. I know who their kids are. I know where their kids are going to school. I know what's going on with their careers. And that's a fantastic part. But the problem is that develops a level of trust.
So Brendon didn't really think much of it. He says, well, maybe this guy's going through some difficult times. I noticed he's been moving around a little bit, but he's always done good for me and there's never been an issue. Well then, one day, Brendon went to the mailbox and he got a letter from the IRS. There was an issue on his return.
And Brendon start to think, he says, well, what's going on. And this is about when I met Brendon, he came in to meet with me after he got this notice. And he said, Ralph, I started thinking, you know, there must be something going on with this. And he started to realize he had trusted the wrong person.
Now we were eventually able to fix it. I'll talk about that in a second, but it cost him time. It cost him money. And let me tell you this story. This is a crazy story. I was working with a client a few years ago and this client had several businesses. And he'd been working, same as Brendon, but the same preparer for many, many years.
And he would go in and meet with the preparer to prepare the tax returns and him and his wife will come in and sign the returns and off they went. Now, in this particular case, this fellow had a small business. So he ended up always owing the IRS. So he would send in these payments and sometimes he couldn't afford to pay him.
So he didn't even send the payments in. Well, fast forward, two or three years and all of a sudden he starts getting letters from the IRS saying, Hey, are you going to file a tax return? Well, turns out this preparer wasn't even getting to the point of filing the returns. He was just having these made up documents, having the people come in and sign, made up documents.
Now, in this particular case, and this was a Delaware preparer, right here in my own backyard. The state board of accounts, they revoked his license. So this guy can't practice anymore. So that's one, and we'll talk about some of those things in a moment. So anyway, fast forward a little bit. Brendon comes in and meet with me.
And he brings in this IRS notice and we look at his tax returns. And sure, there, absolutely. There were errors on his return. It looked like somebody just didn't understand what they were doing. They missed things. They overstated income pieces, all that sort of thing. So the good news, I was able to correct those issues.
I worked with the IRS to get them resolved. I also educated Brendon about the importance of working with a qualified ethical tax professional. You know, I take my license really seriously. I have to do continuing ed every year. There's ethical things that I have to do. There's education that I have to be aware of the ethical practices in my field.
And that's what I educated Brendon. I said, Brendon, you need to understand when you're selecting this person, this is an intimate financial relationship and you need to trust this person. You need to verify it. And that's what I talked about on yesterday's show, how to verify their credentials, how to make sure they're the right fit for you.
So in the end, I was able to help Brendon. I was able to get it all resolved, but it cost him time and ended up costing him some penalties. And it costs them interest because he had to go back and he owed money from when the tax return was originally due. So moral of the story, don't be like Brendon. Find somebody that you can trust
and if you see these red flags, run the other direction. So let's talk about those red flags.
So Edmund, getting back to your question. Let's talk about the red flags to watch out for. These are what I call the biggest red flags.
Number one thing, Brendon found this out firsthand. Refusing to sign the return.
The IRS requires paid preparers to sign returns and include their PTIN number. If they're not doing that, that is a clear sign that they're avoiding accountability because here's the deal. If they don't sign it, if they're not putting their PTIN and again, that's their Preparer Tax Identification Number.
That's how the IRS knows who they are. If they're not signing it, then the IRS has no way of knowing who's preparing these returns. And the office that monitors tax preparers in the IRS has no way of saying, okay, well, this particular person's doing this, or this particular person's doing this. And a lot of times what you'll find is preparers that don't want to sign the returns are one of two things.
One of them is very not a big deal. The other one is scarier. Number one thing is they've bought tax software that is not designed to be used for multiple clients. You know, you can go out and buy the TurboTax of the world. I'm not picking on TurboTax, but you can go buy TurboTax. Well, that's meant to file your personal return.
It doesn't even give you the option to put up paid preparers information on there. So that could be the issue. Maybe this person does a few returns a year. You'd meet them at the local coffee shop. I don't really think there's any sinister intent there, but the second one is somebody who is intentionally not signing return because maybe they've got sanctions from the IRS.
Maybe they've got sanctions from the state board of accountancy or whatever their monitoring system is in your particular state. So if they're not willing to sign the return, listen, if they won't sign it, that is a major red flag that something is wrong. So head in the other direction. So that's the first thing.
Second thing. And picture Brendon sitting in the waiting room of this tax office, and he's just taking it all in. He's waiting to meet with the tax preparer and he hears this conversation between the secretary and somebody on the line. And she's telling them about how they get the biggest refunds for their clients.
And, you know, we're going to get you a huge refund. So if they promise unusually large refunds, and that might sound appealing. A lot of people like, Oh yeah, that's the person I want to go with. But here's the thing you need to understand. Most of the time, that means there's false deductions.
There's false credits. And when the IRS figures those things out, and here's a little story, here's a little truth bomb. And I've seen this time and time again. One of the things the IRS looks for is trends. And they look at trends with tax preparers. So if they're looking at a particular trend, then they go to a tax preparer and they say, well, that's interesting.
Every tax return this preparer does has the same characteristics. I remember we had a client a few years ago and he did a lot of tax returns for people who worked on the airline. These airline stewards and stewardesses. And he would have them get huge refunds because he was taking deductions for everything under the sun. Clothing, haircuts, travel.
So everybody in the airline industry was saying, Oh, you know what? You got to go see this guy, Joe. Joe does a great job with taxes. Let me just tell you, he will get you the biggest refund out there. Well, now Joe was signing the returns as he's supposed to do according to the IRS. So all of a sudden, the IRS starts to notice that why is it this particular tax preparer has all of these clients from the same industry?
Now that's not a terrible thing in itself. Sometimes it's just a relationship thing, but they're all getting these huge refunds and they're all having these huge itemized deduction schedules. So the IRS does an investigation and they go and pull all the records that this tax preparer filed.
And they say, well, that's really interesting. So what do they do? It's like a wildfire of audits. They pulled every single one of that tax preparers tax returns in, and they audited every single one of this particular person's clients because they were making these promises to give these ridiculous refunds and everybody was going to get big money back.
But they were done with false deductions. They were done with false credits. And then all of a sudden, all these people were hauled in before the IRS and they got nailed with penalties. They got nailed with interest, substantial overstatement of expense things. It's a bad scenario. And I've seen clients have this happen.
I've seen them come in with inflated refunds and then all of a sudden they get this notice. And here's the interesting part about this. Little inside baseball tip. Usually it takes the IRS between 18 and 24 months to figure this stuff out. So you filed your tax return in March or April. And you're like, Hey, fantastic.
I got my refund, took that family vacation I was looking for. Everything is fantastic. So then you go back to that same tax preparer again with the expectation of, Hey, he's going to do a good job for me again. So you file that tax return and you get the big refund and then you take that family vacation again.
Well, then all of a sudden about July comes and you go out to the mailbox and you got this notice, just like Brendon did. You get this notice from the IRS that says, sir, we have some questions on your tax return from, yeah, two years ago. So we want you to explain these deductions and think about that cycle.
Now you've already filed two tax returns with this preparer. This preparer was doing the same things. And see, then those IRS bills come later. And then all of a sudden the IRS, you know, they smell blood in the water. And then they just go after you. They take a look at every single one of your tax returns.
And if anybody is saying to you, Hey, we can get you the biggest refund in the world. You know, here's what we do. Run the other direction because nobody can say that until they actually see your documents. And here's a little dirty little trade secret. We have ways to get you refunds, but they're all legitimate.
And it all depends on your particular situation. It depends on your income. It depends on your withholding. It depends on your deductions. It depends on the number of kids you have. There's no way that anybody can make this blanket statement and say, well, we're going to get you the biggest refund. It's fine to say, Hey, we're going to get you the biggest refund you're entitled to.
And that's kind of what you hear on these online, in these television commercials. It used to be, Oh, we promise you the biggest refund. And then all of a sudden I noticed subtly they started adding that you're entitled to. So that's number two. If they're promising unusually large refunds, run the other direction.
Number three thing, as we talk about refunds. If they're basing your tax preparation fee on the amount of your refund, that's a bad deal. It's unethical. I don't know that it's illegal. I'm not sure that it is, but it is definitely unethical because if you think about it like this. What's the incentive for the tax preparer if they get a bigger fee as your refund increases?
Well, it doesn't take a rocket scientist to figure out that if they get you a bigger refund, you pay them more. So what's the incentive? They're going to get you a bigger refund. They're going to talk. And that's the thing. See, what they do is subtle. I call them hustlers, right? They hustle you into taking deductions
you're might not be qualified for. Here's a great example of that. They might say to you something along the lines of, Hey, did you do any charitable contributions last year? Well, yeah, you know, I donate to my church and, okay, well, how much did you donate? Well, you know, I usually throw five or 10 bucks in the collection plate every week.
Oh, that's great. Well, you know, most people give 10 percent of their income. How about we just make it 10%? And you're saying, well, if most people do that, then let's do that. But the problem is then if you get audited, you're going to have to provide receipt evidence. You got to show those canceled checks.
You got to show that proof to the IRS and you're not going to have it. That's one that I see so many times again. So if they're basing their fee on your refund, it's a dangerous practice because that can very well get you and them into legal trouble. It's unethical. Now, here's one thing I'm going to, I'm going to add a little caveat to this because there is one thing that I want to say doesn't affect this, and that's this.
A lot of tax preparers will allow you to pay for your preparation with your refund, or they'll do a refund loan. I did a show a week or two ago about refund loans. I encourage you to go check it out and I'll put it in the show notes. I'm not a huge fan of those refund loans, but the way that refund loans work is they are based on tiers of the value of your refund.
So if you see that, that's not necessarily an unethical practice. That's just the way that they price those. So if you see that, that doesn't necessarily mean that there's anything unethical. That's just he way they price it. So that's number three, basing fees on your refund. Number four thing. Brendon heard this one in the way that you say, Brendon is the poster child for a bad tax preparer experience.
But the next thing is this. Asking for cash payments only. And think about that. What you're doing is you're getting your taxes done. Taxes by their very nature are accumulation of receipts. Well, now you've got this tax preparer saying to you, look, I can't give you a receipt. Just pay me cash. I don't want this reported because nine times out of 10, if somebody doesn't want to have a reporting mechanism, they don't want a paper trail.
It's because they're up to some kind of fraud. That's just the truth. They're up to something because why would it matter? Now I could say, well, you know, maybe they got a lot of bad checks. That's fine. Maybe they take credit cards. Maybe they're going to charge you a percentage for the credit card.
I get that. But to say to the person, Hey, we only take cash. We're not going to give you a receipt. Nine times out of 10. It's also they're preparer. They won't sign the return. And then after tax season, you can't find them. They're on a planet somewhere else. So here's my tip. If they're not willing to give you a receipt, that's a sign to walk.
Maybe even not even walk, run away. Bad plan. So number four, if they're asking for cash payments. Number five, and this one amazed me, but there are so many people that I've met in my practice over the past 30 years who have told me about this. If they ask you to sign forms that aren't filled out yet, here's the deal.
Never sign a blank form. Edmund, listen to me. Don't ever sign a blank form. because it opens up that door to unauthorized charges. Like that tax preparer I was talking about a little while ago. When I did some more research into what he was doing, you know, he had people coming in, they thought their tax returns were done, but turns out what he was doing was he was having them sign a blank e-file form.
He would say, oh, you know, I have a couple more things to do in your return, but I know you're busy. So if you and your wife can come in this Tuesday, let's get everything signed. And then I'll just attach this to the thing and everything will be good. But they were signing blank forms and that's the recipe for disaster.
And I've seen preparers use blank forms to claim false deductions and credits. And here's the thing you need to understand. This is what I call my truth bombs. Even when you use a paid preparer, when you sign that tax return, it's your tax return. Yes, there are sanctions against the preparer.
There's a, it's a thing in the IRS code, which is called reasonable reliance on a third party. And we'll talk about that in another show coming up, but it's your tax return. And I encourage my clients read every bit of your tax return. You're signing this tax return, saying that it is complete, that it's accurate.
All of your information is there. If you're taking deductions, you can prove those deductions. The tax preparer is not that liable for it. Like I said, there are things that they can hold them liable for. But at the end of the day, if you're signing a blank form, listen, that's a bad plan.
It's going to lead to big problems. So number five, if they're requesting you to sign a blank signature form, that's a bad preparer. And the last one on my list here, and this one's kind of a no brainer. Number six is if they're directing your refund to their account. So maybe they're saying something along these lines, Hey, Ralph, you know, come in and get your taxes done.
And here's what I'm going to do. Look, because I'm going to give you your money right now. I got this cash drawer over here. So your refund is $3,000. How about we make a deal? I'll give you $2,500 right now. And what we'll do is we'll just have that tax return put right into my account. And you're thinking, well, you know, I don't have to go through waiting for a check.
That's a whole another story about refund loans. Again, I did a show about that a week ago. That's a totally unscrupulous refund loan, but think about that now. So tax preparer does your return. You're getting a $3,000 refund. They say, Hey, you know what? I'll tell you what, let's just put the money in my account and I'll give you the money today.
It's this way. I'll write you a check. That way you have your refund. And you might think, well, you know, that's a lot of money to spend, but you know, I could use the money. I don't have to go through a traditional bank for a refund loan. Hey, okay. That sounds good to me, but here's the problem with that.
What's to prevent that tax preparer from changing a return once you leave and then requesting a $5,000 refund, because maybe they didn't put everything on the tax string because they knew they could get you a little bit more money, but they didn't want to tell you that's what you were going to get.
And then you sign these forms that you thought were correct saying that $3,000 refund. So this is another one, red flag, big flashing red flag, let the alarms go off. The refund needs to go to your account. Should always go directly to you. And if they ask otherwise, that's a huge red flag, that is a sign of fraud.
So what are my top six things? Let's go back and review those right now. Number one bad preparer, if they refuse to sign the return. Number two, if they're promising unusually large refunds, they haven't even looked at your documents. They're saying, Oh, we're going to get you the biggest refund. Number three, if they're basing their fees on your refund.
Number four, if they're asking for only cash payment, they're not going to give you a receipt. Number five, if they're asking you to sign those blank tax forms. Again, listen to me, don't ever sign a form that's blank. And last but not least, if they're directing your refund to their bank account.
Well Edmund, here's the thing. You might be thinking, Ralph, oh man, I didn't realize all this. But here's my key takeaway. You don't have to settle for someone who cuts corners. You don't have to settle for someone who leaves you feeling uneasy. If you're feeling uneasy, again, I go back to that what I started the show with. This is a trust relationship.
This is an intimate trust relationship. I've said to clients, like I mentioned before. A lot of my clients, I know more about them than their spouse knows about them. Cause I know their bank accounts. I know their income. I know what's going on their lives. So if you're feeling uneasy, and I've said this to my clients before, listen, if you ever get to a point where you don't trust me, let's sit down and talk about it.
And if you find that you just can't trust me, that's fine. I get it. Go see somebody else. Because here's the truth. There are professionals out there who can handle your taxes with care. They can handle them with integrity, and they can handle them with expertise. Well, now let's move on to the next section of my show today.
And I want to talk to you about what you can do if you suspect your tax professional is dishonest, or if you found some of these strange things, because listen, if you don't report this, those people are going to stay out there and they're going to continue to take advantage of people.
So if you suspect your tax professional dishonest, or has made errors on your return, here are some steps you can take. First thing, number one. You can contact the IRS. You can report abuse of tax preparers and suspected tax fraud to the IRS. Now they've got a form for this. The IRS has a form for everything. It happens to be form 14157
and it's a complaint form against the tax return preparer. You can file that form and explain what went on, what was the abuse, and they have an office within the IRS that investigates this type of stuff because they really don't want those unscrupulous preparers out there. But if they don't know about them, then they can't do anything about it.
Now, if you suspect a tax preparer filed or change your return without your consent, if you sign those blank forms, that's probably not a good thing to report. But if you think they changed it or they did something without your consent, you should file the next tax form that you can do is a 14157-A
so the first one was that 14157. The 14157-A is saying that the return preparer fraud or misconduct, that's basically, so we're taking it to another level. The first one was like, ah, I think something seems weird. There's some abusive stuff going on. They're suspected tax fraud, but this one, like it ratchets it up to another level and they're actually reporting
that return preparer fraud or misconduct affidavit. So that's the first thing. Contact the IRS because again, we need to have a professional and I'm a member of this profession. We need to have a profession that knows they're being regulated, know they're being watched. That's one of the things that's great about this PTIN program that the IRS started a few years ago.
It really has put everybody on notice of, Hey, the IRS is watching. So that's the first thing. Second thing. Do this, file a complaint with the Better Business Bureau. Most areas, most towns have them. I know I'm a member of the Better Business Bureau. And if the preparer is a member of that, you can file a complaint directly against them.
And trust me, I know how this works. I've seen this play out. I have seen preparers in my area that have had these Better Business Bureau complaints. And you know, what's cool about that is then it gives them a score. And one of the things that our local Better Business Bureau is doing, and I was pressing them to do this because there are some people out there, especially where I'm at here that say they have a license to practice accounting, or they say they have a license to do whatever that is.
And then they would have this Better Business Bureau account. They'd have these going reviews. And I said to the better business bureau, he came to my office one day to meet with me. And he said, Ralph, what can we do to serve our people better? I said, well, verify people's licenses. If you're going to let them become a member of the better business bureau, you know, they're paying a service for this.
And they say, Hey, I'm a licensed accountant or I'm a licensed physician. Make them verify that license. And maybe you can't do it as they go, but at least do it once a year when they renew. So second thing, first thing was contact the IRS. Second thing, file a complaint with the Better Business Bureau. And then when you go to look for somebody to do professional work, go take a look at their better business bureau profile. See what their grade score is.
Look into the reviews. I think it's a great thing to do. Third thing. Contact your state agency. When I talked about that preparer that was not filing returns, in Delaware, we have a state board of accountancy. Now, if the person doesn't have a license to practice accounting, maybe they're just an unenrolled preparer.
That gets a little more complicated. But if your state has an agency, for example, California has an agency that does this. They verify and they'd license tax preparers, even if they don't have a license for accounting per se. Report them to the state agencies. Again, if you've got a consumer complaint division of your department of justice in your state, report them because the more people that know about these situations, the better, because trust me, there are people out there at this very moment, we're in tax season, who are unscrupulous.
They're bad preparers. They don't have a license and people are flocking to them because number one, people don't check their credentials. Number two, as Brendon learned, I had this relationship with him forever. Ralph, he's a great guy. He's a standup guy, but they have no idea what's going on behind the scenes.
So that's the next thing. Contact your state agency. Another thing you can do, just like Brendon did. Consult with another tax professional. If you find out that there's errors, if you get a notice from the IRS, or if you get a notice from the state, seek a second opinion. Go to somebody like me, go to a qualified accountant, a licensed,
and I talked about that yesterday, what you should be looking for. But go to that person, even if you have to pay a consultation fee and just sit down with them and say, Hey, Ralph, here's my last three years of tax returns. I mean, that's exactly what Brendon did and he got this IRS notice. And he said, Ralph, I just didn't feel right in my stomach about this.
He came in and I saw the errors. They were blatant and we were able to fix them. We filed amended tax returns. So don't be afraid to reach out and verify or have somebody, you know, that you trust another professional, or you'll ask in some of your Facebook groups or around your church community or friends and say, Hey, who do you use?
I'd be careful if they're using that guy, this oldest guy always gets me a huge refund. It might not be a red flag. And finally. Last but not least thing. Keep records. If you believe there's errors on your return, document them, seek that second opinion, because remember a few minutes ago I mentioned this thing about, so let's just let me back up a step.
So let's say that you get an IRS notice. And this IRS notice says, Hey, we looked at your return and there's this huge error on your return. And you look at it and you're like, well, you know, I don't know how to do this stuff. I gave it to Mr. Jones, and Mr. Jones prepared my tax return. You know, he's supposed to know what he's doing and man, I have no idea.
Well one of the defenses you can use with the IRS is what's called reasonable reliance on the third party. So you reasonable relied on this third party person. Well, here's why all those bad preparer tips come into hand. Because if you're going to do, you got to prove it. So number one, you're going to have to prove that they signed your tax return, that preparer signed it.
Number two, they had a PTIN number. You can see that right on the return. Number three, you want to have a receipt that you actually paid them. And number four, you know that you signed a complete tax return. Now, that's not gonna get you out of interest, but I've had many cases where I've been able to get clients out of other penalties because I've been able to say to the IRS agent, look, this dude's a construction worker.
He doesn't know how to do taxes. He reasonable relied on this third party person. He paid him $500 to get his tax return done, and 9 times out of 10, the IRS will say something along the lines of, you know what? That's fair. Here's what I want you to do. You're going to have to pay the tax that you owe.
Again, that makes sense. And we're going to charge you interest, but we're going to waive that substantial understatement penalty. We're going to waive all those penalties and that can be thousands of dollars or at least hundreds of dollars depending upon your tax situation. So in the end, make sure you keep those records.
Now let me ask you a question. You might be thinking, Ralph, I don't even know where to start. I've listened to the last two days of your show and I agree that I need somebody to help me. Yesterday, you walked me through how to find that person. So here's what I'm going to say to you. If you're feeling unsure about your tax situation, let me help you. See, I'm a licensed Delaware public accountant.
I have a license to do this. I've got over 30 years of professional experience and over the years I've worked with thousands of individuals and hundreds of business people, not just preparing their tax returns. That's part of it, but I think the real goal is I show them how to improve their tax situation through careful and intentional planning.
If you listen to me, you know I say this all the time. Tax preparation is great, but tax planning is where it's at. That's where the value is. So I'm going to encourage you. If you don't have anyone else to do your tax, you don't have anybody locally, I can help you. I take the time to understand your unique situation because everybody's situation is different.
There's no cookie cutter. There's no boiler parade approach. And I give you personalized advice. A lot of people don't do that. So whether you're dealing with a complex tax return, which is one of the reasons I said, you might want to reach out to somebody or you just want somebody you can trust. I'm your guide to help you every step of the way.
And here's the best part. I can work with you no matter where you're located. I've got clients in California. I've got clients in Texas. I've got clients and you get the idea, all over the United States. In fact, I've even got clients all over the world, with technology being what it is. You and I can get on a zoom call.
I can be looking right at you. We can do that all together. We can have a, we have a secure portal for passing documents. And I can make that process seamless and I can make it stress free. So here's the deal. Here's my call to action today. If you're ready to take a fresh start, do me a favor and book that one on one call with me by going to askralph.com. When you get there, you'll see a button that says book a call with Ralph. And let's work together. Let's assess what your situation is right now. Maybe I'll look at your previous year tax returns. Let's identify any of those red flags that you've been feeling with your current preparer. Maybe you've been doing it yourself and you're like, Ralph, this has gotten too big for me.
And I'm going to help you develop a plan to maintain that peace of mind and build that trust with you. And here's one thing I ask you to do. If today's episode has resonated with you, here's a couple of certainties in life, death and taxes. So if this episode has resonated with you, do me a huge favor and share it with someone else who might need some of this information.
You can send them simply by send them to go to askralph.com because it can make all the difference. Maybe they're working with one of those unscrupulous preparers and they never realized that prepare is supposed to sign a return. And they never realized that they're responsible and they never realized, you know, that they shouldn't be signed in blank form.
So I encourage you. Everybody files taxes, send it to everybody you know, and say, Hey, listen, just, you might have a good person. And like I said, there are a ton of very ethical, very competent tax professionals. That's not who I'm, that's not who I'm going after today. I'm going after the bottom feeders.
So share this episode with others because you might be able to make a huge impact on their tax situation.
Well, now let's move into our reflection questions. You know, at the end of the show, I always like to sort of go back and reflect on what we've handled today. So let's get right to that. Number one thing, ask yourself this. Have you noticed any red flags with your current tax preparer?
You know, maybe you're like Brendon, you've been working with the same person for years and you know, something just doesn't seem right this year, Ralph. I went to the guy's office or the lady's office and things just don't see the same. He's got all new staff people. There's all these mentions of refund this, and refund that, maximize your refund on the wall, it seems like i'm not going to a professional anymore.
I'm going to a sales pitch. So ask yourself that question, you know, have you noticed any red flags with your current tax preparer? And if you have, it's probably time to make a change. Go verify their credentials, go look them up on the Better Business Bureau, go look at their Yelp or their Google reviews.
Second thing. What steps can you take today to verify their credentials and ensure your taxes are being handled correctly? How can you reinforce that trust that you've built up with this person? Go back to my show yesterday. I mentioned the steps you can take to verify those credentials and make sure, listen, you might find that this person's fantastic. Their credentials are up to date. If you do mind, you can check me out. Look me up. I have nothing to hide. Number three question. How can you apply today's Bible verse that Proverbs 27, 23 and 24 to be a better steward of your finances this tax season? You know, how can you make sure you maintain those flocks?
Like I said, How do we make sure that those black Angus cows are taken care of? Well, we make sure they have water. We make sure they have fresh grass and fresh hay to eat. We make sure that the vet comes out and checks them. You need to do the same thing with your finances because that's the way you steward your finances as the Lord intends you to steward.
So as we get to the end of the show today, we've tackled this question. Who's doing your taxes and can you trust them? I hope I've given you some clarity in that. I've given you some things to ponder on. We talked about the red flags to watch out for, and more importantly, I give you some actionable steps to avoid the pain and choose the wrong preparer.
If you've got that person, if you know that person, I'm going to encourage you again, report them. Now tomorrow, as we continue on tax week, we're going to talk about what to do if you receive that notice. So just like Brendon, year goes by, or maybe six months go by and you, all of a sudden you got this notice.
Tomorrow, I'm going to address how to handle that. It's a little teaser. First thing I'm gonna tell you to, don't panic. Make sure you tune in tomorrow and check it out. And as I said, again, if you're interested in supporting the show, if you feel like I'm giving you value, one of the best ways you can do that is go to askralphpodcast.com/support. I would really like it if you support the show. And remember this as I close. My passion is to help you achieve financial success. That's my goal. That's why I turn on this microphone. That's why I turn on this camera. If you're watching this on YouTube or Rumble or on one of our video shorts, that's my passion.
It's my mission field because I want to see you live out your dreams. I don't want to see you in stress and have that broken peace of mind. I don't want to see you in a relationship with a preparer that you don't trust. And at the same time, I want to help you grow in your faith because I know together, working together.
We can master your finances from that Christian perspective. So as I always end the show, stay financially savvy out there, think on those reflection questions today, and may God bless you abundantly.

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