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Zaher Fallahi, Tax CPA and Attorney; Affordable Care Act Consumer Alert: Choose Your Tax Preparer Wisely

posted Mar 14, 2015, 10:39 PM by Zaher Fallahi

The IRS urges taxpayers to select their tax preparers carefully as reports are coming in from around the country describing unscrupulous tax professionals who instruct their clients to make individual shared responsibility payments directly to the tax preparer.

The IRS reminds taxpayers who owe taxes that it should be made only with their tax return or in response to an IRS letter.  The payment should never be made directly to an individual or tax preparer. Most people don’t owe the payment at all because they have health coverage or qualify for a health coverage exemption.

The IRS has received several reports of this kind of unscrupulous activity.  In some cases, tax preparers have told their clients to make the payment to them, even though the taxpayer had Medicaid or other health coverage and doesn’t need to make the shared responsibility payment at all. In some areas of the country, unscrupulous tax return preparers are targeting clients with limited English proficiency, particularly the Spanish speaker.

These preparers are asking for direct payment to them, but their reasons vary. Methods include:    

a). Telling clients that they must make an individual shared responsibility payment directly to the tax preparer because of their immigration status, 

b). Promising to lower their payment if the taxpayer pays them directly, or demanding money from clients who are exempt from the individual shared responsibility payment.

If you believe you have been victimized by an unscrupulous tax preparer or you have been financially affected by a return preparer’s misconduct or inappropriate tax practices, you can report it to the IRS on Form 14157, Complaint: Tax Return Preparer.

Taxpayers who are not certain if they must make a payment can use the IRS’s Interactive Tax Assistant tool - Am I required to make an Individual Shared Responsibility Payment? -  to help determine if they qualify for an exemption or owe the payment. 

Choose a Tax Preparer Carefully

The vast majority of tax professionals provide decent and high-quality tax service. However, the IRS encourages taxpayers to avoid dishonest tax preparers by choosing their preparer wisely. To help, the IRS offers a new, online, searchable public directory of tax preparers who currently hold professional qualifications recognized by the IRS.

For information on choosing a preparer, filing a complaint about a dishonest tax preparer, or using the IRS’s new directory, see our Choosing a Tax Professional page on IRS.gov.

Tips about Individual Shared Responsibility Payments

Payments are not required for individuals who had health insurance coverage or qualify for an exemption for each month of the year.

Individuals who are not U.S. citizens or nationals, and are not lawfully present in the United States, are exempt from the individual shared responsibility provision and do not need to make a payment. For this purpose, an immigrant with Deferred Action for Childhood Arrivals (DACA) status is presumed not legally present in the US and is exempt.  An individual may qualify for this exemption even if he or she has a social security number (SSN).

Taxpayers either pay their shared responsibility payment along with their income tax return or in response to a letter received from the IRS.  They should not make the payment directly to any individual or tax return preparer. If a shared responsibility payment is due, taxpayers should pay it to the US Treasury. Most the time, the shared responsibility payment reduces a taxpayer’s refund through their tax returns. If there is no refund, the payment will be added to the tax liability in the tax return

Zaher Fallahi, Tax CPA , assists clients including Americans living abroad with  tax preparation, tax planning, IRS representation, disclosing undeclared foreign bank accounts (offshore voluntary disclosure program, OVDP), report of foreign bank & financial accounts (FBAR, Foreign Account Tax Compliance Act (FATCA), Telephones:  (310) 719-1040 (Los Angeles), ( 714) 546-4272 (Orange County) or e-mail:  taxattorney@zfcpa.com

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