4 Signs You are Dealing with the Wrong Tax Preparer

Understanding income tax laws is not easy for a layman. Every individual who earns, however, must pay their taxes, for which they have to file a tax return. That is why many taxpayers, especially HNWs who are short on time, hire a tax preparer to file their income tax returns. The bad news is that not all tax preparers have similar experience and knowledge as some are just luring taxpayers with false promotions, and offer no value for their fee. To ensure you do not end up hiring the wrong tax preparer, here are four tax preparer red flags to avoid.

1. Suggest You Deposit Your Money in a Different Account

It goes without saying that your tax refunds must go into your account. There are a few tax preparers who might suggest you to deposit this money in a different account, with reasons that the refund would arrive faster or it would be more convenient for you to get your money this way. Chances are, if you are not getting your money in your account, you are never going to get it. 

2. Promise of High Returns in the Same Situation

Tax refunds or deductions have not increased significantly over the years, instead there has been a rise in the percent of payable taxes in the past few years. That said, if a tax preparer is promising that they can get you higher tax return than last year, when the situation has not changed, they might be showing you incorrect figures. 

3. Fees Based on Refund Percentage 

Tax preparers who charge their fee on the basis of refund are more likely to be fraudsters. The fee of a tax preparer should ideally be based on other factors such as the type of tax return and its complexity. If the tax preparer you are working with, or about to hire, base their fee on the refund amount, watch out, as you might de dealing with the wrong person. 

4. Insist on Signing a Blank Form

Even if a tax preparer is filing the tax return on your behalf, you are liable for whatever information there is on your tax return form. Signing a blank paper is like signing a blank check. You may never know if the information that your tax preparer has entered is correct or false. Stay away from tax preparers who ask you to trust them and sign on the dotted line without worrying about the information present in the paper.

Conclusion

Many tax preparers offer false promises such as higher tax refunds and a guarantee of a refund by a certain date to sell their services. A few may even ask you to pay a health insurance penalty directly to them. That is why it is essential that you do not trust individuals who give you unreasonable promises, and look for those who would help you get your taxes right. If you need help to file your taxes, better hire a licensed professional such as an attorney, or a CPA (Certified Public Accountant). 

Read More »

Taxation Services in India

Introduction

The Central government is responsible for levying taxes in India.  The Constitution of India gives Central and State Government the authority to levy tax. Article 265 of the Indian Constitution is an important restriction on this power. It states that “No Tax” shall be collected or levied except by the authority of law. Each collected or levied tax is backed by a law known as an accompanying law, which is passed either by Parliament or by the State legislature.

Scheme of taxation established by the Constitution

Distribution of the legislative powers is given in Article 246 of the Indian Constitution, including taxation between State Legislature and the Parliament of India. List of issues enumerated in Schedule VII is as follows:

•    List - I: Areas  under which only the Parliament is competent to make laws.
•    List - II: Areas under which only the State Legislature is competent to make laws.
•    List - III: Areas on which laws can be accomplished by both, Parliament as well as the State Legislature.

Income Tax Department

The Income Tax Department works under the Ministry of Finance (Department of Revenue). It is responsible for various Taxation services India and Acts of direct taxation passed by Parliament.

•    Wealth Tax Act
•    Income Tax Act
•    Gift Tax Act
•    Interest Tax Act
•    Expenditure Tax Act
•    Various Finance Act

Central Board of Direct Taxes

It is a part of the Ministry of Finance and provides essential inputs in planning and policy formulation regarding direct taxes. It is also responsible for direct tax administration under the Central Board of Revenue. Initially, it was responsible for direct as well as indirect taxes before the board was split into two, namely the Central board of Excise and Customs, and the Central Board of Direct Taxes. Members of the Central Board of Direct Taxes are selected from the Indian Revenue Service (IRS), whose members constitute the topmost management of the Income Tax Department.

Service Tax

Service Tax is levied by the Central Government of India. There are many Service Tax Providers India giving you access to professional and affordable services. The rate of service tax is going up this year, as from the 1st June 2015. The Service Tax is consolidated as the secondary higher education cess and as education cess.

Conclusion

Taxation in India is provided for under various taxation laws. Although the laws are clear, the territory can be daunting for a layman. This is why there are several professional and experienced taxation service providers to take care of your requirements and give you the best advice. they can also help you resolve any disagreements and discrepancies.

Read More »