Volunteer Tax Preparation

[Jagella]

Hello Friends:

I'm currently retired as a result of a disabling injury, but I'd still like to do some work. My last job was in tax preparation for a local Liberty Tax franchise. I'm planning to take the ten-week income-tax preparation course again this fall with Liberty. Next tax season, I'm going to offer my tax services to friends, relatives and anybody else for free. I will work from home and prepare tax returns using Turbo Tax. I'm hoping to help people avoid the big fees that a lot of tax-preparation businesses charge.

Does anybody here have any advice for me in this effort? Are there any legal problems I might run into doing this kind of work?

Thanks!

Jagella

[Freelancier]

Get liability and E&O insurance. You may offer this service for free, but that doesn't cover your liability in case you make a mistake.

[Jagella]

Get liability and E&O insurance.

Thanks. How much does such insurance cost?

My former college instructor and friend runs a tax-preparation business and has volunteers prepare taxes for free. I'll have to ask him about this issue. I'm sure he'll accept my working for him if I decide to go that route.

Jagella

[Freelancier]

You'll have to talk with your insurance agent about pricing and your exposure if you do not get any insurance and make a mistake on someone's tax return.

[Jagella]

You'll have to talk with your insurance agent about pricing and your exposure if you do not get any insurance and make a mistake on someone's tax return.

I'm wondering what mistakes might get somebody upset enough to sue me.

I'll also discuss this situation with Liberty Tax. They should be able to give me some good advice regarding liability.

Thanks again,

Jagella

[Fulcrum]

I'm wondering what mistakes might get somebody upset enough to sue me.

I would think any mistake that would result in a client having to pay, either now or in the future (with penalties).

[jamesray50]

I think that is great that you want to provide free tax return preparation. I'm not sure if you would need a PTIN since you won't be signing the return as a paid tax preparer. Another group of people who need tax preparation are seniors. Senior citizen centers or nursing homes may want to use your free services. I don't do any tax returns so I can't really offer much advice, but I would only do simple returns for individuals. I wouldn't do any business returns. If word got out you were doing free returns for businesses you may end up with more than you can handle. You certainly don't want anyone to take advantage of your generosity.

Good luck!

[Jagella]

I'm not sure if you would need a PTIN since you won't be signing the return as a paid tax preparer.

I had a PTIN when I worked for Liberty. I'm not sure if it's still valid or not. In any case, you are correct that I won't need one.


Another group of people who need tax preparation are seniors. Senior citizen centers or nursing homes may want to use your free services.

I'll inquire about helping seniors with tax returns. I live in a building with a lot of seniors who can also use help with rent rabates.


...I would only do simple returns for individuals. I wouldn't do any business returns.

I may try some business returns if the businesses are run by sole proprietors. They're not that hard to do.


If word got out you were doing free returns for businesses you may end up with more than you can handle. You certainly don't want anyone to take advantage of your generosity.

Actually, a lot of business owners might not trust me if I'm giving away my service. They may fear that they'll be getting what they pay for! ;)


Good luck!

Thanks!

Jagella

[TAAccounting]

I would say you need to be careful since the IRS will do an estimate and fine you returns that are prepared incorrectly.

My tax departments get a few of these every year and it is annoying to deal with -- since we send it to our insurance and they pay it.

But keep in mind, tax returns can come back to you after seven years, or indefinitely if they believe fraud was involved. It's something that I would ensure you have a lot of insurance to be on the safe side. If you are interested in volunteering -- I work with local universities and help prepare tax returns for inner city people every year.

Best Regards,
Tran Nguyen
Accountant