Tax consultants are financial experts who assist clients with tax issues. This can include preparing tax returns, acting as a representative, or giving specialist advice. The ways in which a consultant operates, such as their fees and their licensing requirements, can vary greatly in different jurisdictions.
The most common role of tax consultants is to help people prepare and file their tax returns. This can be a valuable service, as failing to do so properly can leave a taxpayer liable to paying penalties. Incorrectly prepared tax returns can also mean a taxpayer misses out on a rebate they are due. This is particularly important in countries where the system generally involves paying estimates in advance and then recovering any excess as a rebate at the end of the financial year.
A second role of tax consultants is to give help and advice on general tax matters. This could include changing how a business is set up, or rearranging payments and income to fall into a different tax year. In some areas, there is a distinction between a tax preparer, who solely works on preparing tax returns, and a consultant, who offers more detailed assistance.
The way tax consultants charge fees can vary considerably. Many will charge a flat fee, particularly for tax preparation. Some will charge a varying fee based either on the time they spend on a project or the value of the income covered by the tax situation. In some cases, a consultant may charge a proportion of any rebate they are able to obtain.
A tax consultant can be particularly useful during an audit. In most cases, the consultant will be allowed to formally act as a representative for a taxpayer or company during the audit. This means he or she acts as the point of contact for tax officials and can answer many of their questions.
It is not uncommon for tax consultants to have a area of specialty. This could include taxation on businesses, tax law regarding charities, or property taxation. In most cases, the specialist will have had a formal education or training in the relevant area of tax law, and will also have professional experience dealing with such cases.
The legal requirements for acting as a tax consultant vary from state to state and across different countries. Some US states have no legal restrictions on who can prepare a tax form. Other states have specific licensing requirements which can differ depending on whether or not the consultant is allowed to act as a representative during an audit. There are also professional associations which can give some guarantee of a consultant’s professional expertise.