Californians Offered New Tools for Protection From Illegal Tax Preparers

More Than 10,000 Illegal Tax Preparers in State

SACRAMENTO, Calif., March 9 /PRNewswire/ -- In California alone, an estimated 10,000 people are illegally preparing taxes. Consumers must do their homework before selecting a tax professional. The California Tax Education Council (CTEC) is a non profit entity, helping consumers take the critical first steps to protecting themselves by offering a free new resource.

"The legislature has given us the task of protecting consumers who pay someone else to prepare their tax returns," said Elaine Lyttleton, CTEC Chairman. "One of the ways we're doing this is by providing a free new Internet tool, which helps consumers find tax preparers who are legally qualified to prepare tax returns."

On the "Consumer Tips" page at http://www.ctec.org, consumers will find a checklist of six simple steps to follow when searching for a qualified tax preparer. For example:

Only four groups of professionals in California can legally charge a fee to prepare tax returns. By asking to see your tax preparer's credentials, you can verify that he or she is one of the following legally qualified tax professionals.

-- CTEC Registered Tax Preparers (CRTPs)
-- Certified Public Accountants (CPAs)
-- Enrolled Agents (EAs)
-- Attorneys

Lyttleton says, "If a tax return is examined and found to be fraudulent or incorrect, it is the taxpayer who gets in trouble. By using this checklist as a guide, consumers may be able to avoid unexpected tax bills and penalties resulting from negligent tax preparation."

The CTEC Web site also features red flags indicating a person may not be legally qualified to prepare tax returns in California. For example, consumers should be wary of a tax preparer who refuses to sign a tax return that he or she prepares. A lawful tax preparer will always signs the tax returns that he or she prepares.

Additionally, consumers will find tips for responding to and reporting tax preparers they believe may be preparing tax returns illegally. Consumers can enter the name of their tax preparer to see if he or she is registered with CTEC. In addition to the Web site tool, Lyttletone says, "We are working in concert with the Franchise Tax Board (FTB) and their fraud unit to identify tax preparers who are not in compliance with California law, meaning they are preparing tax returns without proper education and registration. When caught, non-compliant tax preparers can face serious consequences."

Now there is a way to assess penalties upon unregistered tax preparers.

Senate Bill (SB) 229 was passed in 2005 and became effective January 1, 2006, creating the first state law granting authority to issue severe financial penalties to tax preparers not registered with CTEC. The new law allows the Franchise Tax Board (FTB) to issue a $2,500 penalty to unregistered tax preparers and a $5,000 penalty for subsequent violations.

CTEC was established by the California State Legislature to protect the public by registering tax preparers within the state of California. Last year CTEC registered more than 37,000 tax preparers. To find out if your tax preparer is registered with CTEC:

1. Ask him or her;
2. Look for a CTEC sign in his or her office;
3. Go to http://www.ctec.org and click on the link to "Verify a Tax Preparer";
or
4. Call toll-free at 877-850-CTEC (2832).

For more information about CTEC, call us toll-free at 877-850-CTEC (2832) or visit us online at http://www.ctec.org.