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Choosing A Return Preparer for Overseas Americans
For Overseas Americans one of the biggest surprises and challenges they can face when moving overseas is complying with the various US tax and bank account filing requirements. Remaining in compliance with US filing regulations is one of the best defenses against the potentially onerous fines related to non-compliance in Financial Bank Account Reporting (FBARs) combined with the omission or under reporting of foreign income on a US tax return.
Unfortunately, ignorance of tax laws (regardless of how complicated they are) or having a tax advisor who is not competent to advise in a particular client’s circumstances are not reliable defenses when a challenge arises from the IRS. Many Americans who have been using a domestic tax preparer with little “international” experience or who have been preparing their own tax returns with off-the-shelf software may believe that they are in full compliance with their US tax obligations; though this is often not the case. IRS publications dealing with international issues for individual (not corporate) taxpayers, count over 8,000 pages of text. Doing it yourself or with a domestic tax preparer is possible, and for some American taxpayers this may be the most effective alternative.
American Citizens Abroad plays an active role in educating overseas Americans about US tax policy and informing members of the US government on how US tax policy affects, sometimes adversely, overseas Americans. While ACA is actively encouraging changes to US tax policy with respect to overseas Americans, this process is slow and uncertain. In the meantime, we encourage all Americans to make every effort to comply with their US tax and filing obligations.
In order to assist in this effort, ACA has prepared a Directory of US Tax Return Preparers who have experience in working with overseas Americans. The market for US Tax Preparers runs from Large International Account firms with offices in dozens of countries to one person home based offices and everything in between. The cost of preparing a tax return can be as low as a few hundred dollars or many thousands of dollars per year and depends not only on the complexity of the individual’s situation, but also on the type of individual or firm that is hired. Higher cost does not necessarily mean higher quality.
To further assist your search for an international tax preparer, here is a list of questions that you may want to consider when interviewing an individual or firm to help you in the preparation of your tax forms. Your tax advisor will be privy to lots of confidential information and may play a large role in keeping you compliant and out of difficulty; so don’t take the search process lightly. Many small firms fill up their capacity very quickly and they also screen prospective clients; so being a desirable client (e.g. polite, well-organized, timely, and interested in complying with your obligations) can often help you to secure the services of some of the best advisors. If you’re current international advisor can no longer service your needs due to retirement, over-capacity or other reasons [this happens more often than you may think], you may find yourself starting the search process over again.
For Americans overseas, here is a list of questions to consider asking when hiring a tax preparer. The questions are in no particular order; ultimately you are looking for a trusting partnership from both sides.
What percent of your practice is working with overseas Americans? And from the country where I am living?
Are you registered with the IRS as a professional tax return preparer? Do you have a Preparer Tax Identification Number (PTIN)?
What are your professional credentials? Attorney? CPA? Enrolled Agent? Other?
Are you familiar with the tax treaties (if any) between the country where I am living and the US?
How familiar are you with the tax rules (language) of the country where I live? [This can really help to get the best quality.] Do you have local partners in that country in order to clarify issues that may arise?
Do you work with people who are generally similar to me [employment status, family status (e.g. kids, marital status, non-American spouse), business owner, retiree, government or NGO employees, etc.]
How long have you been working with overseas Americans, what is your background? What are your qualifications? Did you ever work at a Big 4 accounting firm? If yes, when did you leave?
Do you also file the FBARs?
Are you familiar with gift and estate tax rules?
What is your price range for clients like me? Will you charge me for each phone call and e-mail as we clarify information on having my return filed?
How full is your practice? What is the normal turnaround time from the time I deliver to you all of my documents to the time my return is ready to be reviewed by me for filing?
Do you automatically file an extension to June 15th? What is your target date for filing my return if I get you all of the information by XXX date?
How many people work in your practice? Will you be filling out my tax return or will it be someone else? If it is someone else, are they an employee of your firm and how do you control quality and privacy? Who will be my main point of contact?
Have you ever been involved in a lawsuit with a client or had any disciplinary actions that I should know about?
Have you ever fired a client? If yes, for what reasons?
How are you comfortable receiving and sending documents? Paper, e-mail, secure server? What technology solutions do you use if not everything is handled in paper/physical format?
What are your security policies to protect client confidentiality?
If you notice something I can do to save on taxes will you tell me? Do you offer tax planning, if yes, what are the additional charges for this?
If I get audited by the IRS or receive an IRS notice, what will you do to assist me?
Will you review my prior year tax return(s) and comment on any areas that you would do differently?
If I have interests in the United States, are you familiar with the state tax return(s) that need to be filed, if any?
Are you available outside of tax season for questions?
Do you work with other professionals in related fields? If yes, do you pay for referrals or receive compensation by referring clients to other professionals?
If I need certification of tax compliance for a bank, financial institution or other professional, do you provide such certification?
Have you worked with any clients who had to enter the Overseas Voluntary Disclosure Program?