Part three of the series of taxpayer tips for working with a tax professional. This series is not to replace but supplement the IRS's tips.
Signing the Return.
Anyone who has prepared a income tax return for compensation is required by the IRS to sign the return and complete the paid preparer section of a tax return. This is the copy that goes to the IRS. The actual signature doesn't have to be handwritten but the preparer's ID and business info does have to be completed. Preparers are not required to sign the client copy of the return. If the return is e-filed, the 8879 acts as the signature form for both the taxpayer and preparer. Since this form must remain on file with the tax preparer for 3 years, e-filed returns don't generally have a signature problem.
I see this problem on returns which were hand prepared or with the box (basic software). By signing, the preparer takes responsibility for that return. And in most cases that is why the return isn't signed. There are bad preparers out there. They are bad because they don't keep up with the tax law changes or they are creating fraudulent returns to get their clients larger refunds. So does that mean the preparer is bad if they won't sign your return? It depends on why they refuse to sign it.
Some preparers won't sign the return because they don't want to put their SSN out where anyone could see it. This is why the IRS created PTIN, Preparer Tax Identification Number. Getting a PTIN is simple. Filing the form W-7P with the IRS will get any paid preparer a number that can be used on tax returns they prepare. Then there are people who don't understand that the rules apply to them. Excuses I have heard include, I just do it for a couple of cases of beer, I only charge a few dollars or I don't do this full time. No matter the rationale, if you receive something for preparing a return from someone else, you should be signing the return. The preparer needs to take responsible for the return as if it is their own return. You sign your own return, so you need to sign any return you had a hand in creating.
The responsiblity issue is behind most non-signings and the most troubling for taxpayers. If the person you are paying won't stand behind their work with a correctly filled out and signed signature section, then I would think about finding someone who will. It won't help you with an IRS issue. Even with a signed preparer on the return, you are the one the IRS will hold accountable for most problems. Taxes can be scary enough without adding to stress a tax preparer who won't stand up for their work. I would ask myself, what do they know they aren't telling me? A little paranoid thinking may help protect yourself.