Trading checks is prohibited. A tax preparer is prohibited from endorsing or negotiating with any other mode a check issued to a customer by the government in connection with a federal tax liability. Example:
- Paul operates a tax preparation business in a low-income part of town. Many of your clients do not have banking relationships. They have to pay high fees to cash checks. Last year, Paul did a promotion in which he offered to cash federal refund checks at no charge to customers who paid him for the preparation of your federal and state tax returns. Paul must quickly change his promotional offer. As a tax preparer, Paul cannot cash federal tax refund checks on income to his clients or anyone else. This prohibition applies regardless of whether Paul is authorized to represent taxpayers or who is an unregistered preparer
- Tax preparers must do all of the following:
- Sign the tax return and enter your PTIN (Preparer Tax Return Identification number taxes) in the space provided on the return, after it has been completed and before it is presented to the taxpayer.
- Enter the business address in the space provided in the declaration.
- Provide the taxpayer with a completed copy of the return at the time the tax return is filed for the taxpayer to sign.
- Retain one of the following items for a period of three years after the end of the period of the statement:
- A copy of the completed taxpayer return.
- A record of the taxpayer’s name, TIN, taxable year, and type of return prepared.