Welcome to CTEC's White Paper Series

An insurance license alone does not authorize someone to prepare tax returns for a fee. The same principle applies to other licensed professionals, such as real estate agents and Certified Financial Planners (CFPs). Before hiring anyone to prepare your taxes, verify that they hold the appropriate tax preparation credential, such as an attorney, CPA, IRS Enrolled Agent, or CTEC registration.

A tax preparer's fee should be based on the work involved in preparing your return—not on how much money you get back. If a tax preparer charges a percentage of your refund, they have a financial incentive to increase the refund amount, which can lead to inaccurate or improper reporting. Be cautious of anyone who promises a bigger refund or wants to be paid based on the size of your refund.

A business label is not a legal signature. Paid tax preparers must sign returns using their individual name and IRS Preparer Tax Identification Number (PTIN).

Some taxpayers receive copies with a business label placed over the paid preparer section, making it appear the return was properly signed. However, the actual return filed with the IRS or state may identify the return as "self-prepared" or leave the paid preparer section blank. This practice is not legal and may be used to avoid accountability for the work performed.

Your tax refund should be deposited into an account owned by you. A tax preparer should never ask to have your federal or state refund sent to their personal or business account. While some tax preparation firms offer bank products that allow preparation fees to be deducted from a refund, those transactions are processed through a secure third-party bank—not through the tax preparer's own account. If a tax preparer wants your refund deposited into their account, consider it a major red flag.

Even if a tax preparer makes a mistake, you are ultimately responsible for the information filed under your Social Security number. That's why it's important to review your return carefully before signing it.

If an honest mistake occurs, legitimate tax preparers will generally work with the taxpayer to correct the error and help address any resulting issues with the IRS or the California Franchise Tax Board (FTB). Tax preparers who violate tax laws may also face penalties, disciplinary action, or criminal prosecution, but taxpayers are still responsible for errors or inaccurate information reported on their return.

Complaints against tax preparers are handled confidentially. Reporting suspected fraud or misconduct helps regulators identify dishonest preparers, protect taxpayers from financial harm, and strengthen consumer protections throughout the community.