tax preparer | robergtaxsolutions.com

Perry the guinea pig in his stegosaurus costume. Photo by Kelsey Witzling.

A big part of my business is helping people who are getting audited by the IRS. What you might find surprising is how many people I wind up helping that paid a “professional” to prepare their tax returns. I use the term professional loosely here because right now, basically anybody with a computer can hang out a sign and say they are a tax professional.

Now the IRS tried to put a stop to that, they set up rules requiring testing and training for anyone getting paid to prepare tax returns. But they lost a court case so now you’re stuck trying to guess if your preparer has even minimal competency.

One of the questions I ask when reviewing an audit return is, “How old is your tax person?” Full disclosure here, I’m also “over a certain age”—let’s just leave it at that. Lots of tax professionals are older. (At the IRS convention in Chicago this summer, we made a game of looking for people who were under 40—not many to be found.) But the dinosaurs are the ones who don’t keep up with the new tax laws.

True story: a woman came into my office because she was being audited and the IRS wanted a few thousand dollars from her. She had had her return done by a “professional” but he didn’t do audits so she found me on the internet. Red Flag 1: if your “professional” won’t represent you on a tax return that he’s prepared then he’s probably not credentialed.

Anyway, I took a look at the return and asked her a few questions. By the time I got to, “How old is your tax preparer?” I already knew the answer. He was a retired CPA. He just did tax returns during the season to keep busy.

I handed back the tax return and told her to pay the money. The tax return had been prepared using 2004 tax rules. Had the return been done in 2004—fine, but since it was her 2010 taxes, everything was different. Here’s the real kicker—had she done her own taxes using Turbo Tax or some other home style software—she wouldn’t have made that mistake. The software questions would have guided her to the right answers and she never would have claimed a deduction that she wasn’t allowed.

There are lots of mature tax preparers (I’m one of them) who keep up their licenses, take update classes and keep up with what’s new in tax law. The tax dinosaurs, on the other hand, are living in the past and can cause more harm than good for their clients. Here are some warning signs that you’ve got a dinosaur:

1. Your preparer won’t e-file your tax return. Any professional tax preparer that prepares over 10 tax returns a year is required to e-file the returns. If you have a “normal” tax return and you still have to mail it—that’s a warning sign that your person is behind the times.

2. Your preparer doesn’t use tax software. I don’t care how brilliant the person is—software is necessary for today’s tax returns. Software isn’t perfect, but it eliminates many mistakes.

You should also beware of preparers who won’t sign your return and don’t have PTIN numbers. That’s not necessarily a dinosaur, that’s more likely fraud—you should run from those guys.

Dinosaurs are extinct. The one time the IRS tried to do the right thing and protect people from the tax dinosaurs, they lost the court case. So you have to protect yourself. Tax dinosaurs should be extinct too.

Photo by Otto Greule Jr at Getty Images

Let me start with full disclosure: I am a card carrying member of Cardinal Nation. As I write this I am sitting on the sofa wearing my St. Louis Cardinal’s jersey hoping to type this out before the first pitch of the game. So forgive me if it’s considered blasphemy but, the infield fly rule called against Atlanta during the 2012 Wild Card Play-Off was a bad call. (http://www.nesn.com/2012/10/infield-fly-rule-prompts-criticism-of-umpires-call-for-instant-replay-in-mlb.html) Hopefully we would have still beaten the Atlanta Braves anyway, but we’ll never know.

Another bad call occurred in week 3 of the 2012 NFL season featuring the Green Bay Packers and Seattle Seahawks—a Hail Mary pass was thrown and members of both teams caught the ball while the replacement officials gave conflicting rulings. (http://bleacherreport.com/articles/1346952-packers-vs-seahawks-the-replacement-officials-finally-broke-the-nfl) That was a horrible call.

Sometimes tax preparers make a bad call when they do your taxes. We’re not perfect either. The other day I got a phone call from a woman who needed help. The IRS was going to garnish her paycheck and she needed some help stopping it. After I got the immediate problem taken care of, I asked her some questions about her tax return. After getting enough details, I realized that the woman’s previous preparer had missed a pretty major deduction. I recommended that she amend her return and have it done correctly, it would seriously help with her tax debt. You see, when you make a bad call on your taxes, unlike some of the referee calls in sports, you have a three year period to make it right by amending your return.

The woman asked me what I’d charge to fix her taxes and she was a little shocked by the price. She told me that her other preparer at “Brand X Tax Company” had only charged her half that much so she wouldn’t hire me. Ahem. I used to work for “Brand X”. I know their billing practices and they charge by the form. Had the preparer done all the forms that this woman needed to correctly file her tax return, the price would have been much closer to, if not more than, what I was charging. But besides that, we’re talking about reducing her tax burden by a few thousand dollars. Really I’m not all that expensive. So now who’s making the bad call?

I remember a few years back, an elderly woman came into my office with an IRS letter. It said that she owed about $10,000 and she didn’t know what to do about it. As I looked at the letter and then at her return, I realized that she had a bunch of stock transactions that hadn’t been reported on her tax return. Although the IRS said that she owed $10,000, when I checked things out, she really didn’t owe anything at all, she just needed to have her tax return done correctly.

When I told her the cost, she too was shocked, “But my other lady only charged me $20 to do my taxes,” she said. “But your $20 tax return is going to cost you $10,000,” I replied. She was smart, and now her taxes are done correctly.

Here’s the big hint—if you get a document that says “Important Tax Document”, you probably need to report something from that paper on your tax return. If you give your preparer that piece of paper and she ignores it, that’s a red flag that something’s wrong. Shame on her. If you don’t give that paper to your preparer, then it’s shame on you.

Preparers can make mistakes. (Even me, that’s why I have my staff review my returns just like I review theirs. We’re all human.) If you get an IRS letter, the first thing to do is to contact your tax preparer and give her a chance to fix it. She might not have even made a mistake; sometimes it’s an IRS mistake. They’re human too—(some of them.) But if your preparer can’t or won’t help you when there’s a problem, it’s time to make the right call and move on.

Tag: tax preparer

Is Your Tax Preparer a Dinosaur?

Bad Calls