Posted on March 5, 2013May 31, 2016 by Jan Roberg

Is Your Tax Preparer a Dinosaur?

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.

Posted on January 8, 2013May 31, 2016 by Jan Roberg

Should You Hire a Tax Professional that Wears a Funny Costume?

Taxes are complicated. Although, some returns are fairly easy to do, with Congress changing the rules all the time, it really helps to hire someone who knows what they’re doing.

Okay, I’m going to toot my own horn here, but Enrolled Agents are licensed by the Department of the Treasury to represent people before the IRS in all tax matters. We have to pass a test. Actually, it’s nine hours worth of tests divided into three parts. You have to pass all three before you can call yourself an EA.

EA’s are also required to take 72 hours of tax training every three years to keep their certification. And we also have to pass a tax compliance check—meaning, the IRS takes a closer look at my tax return.

Most of those people at your big box chain tax stores are not EA’s.

There’s also a new preparer designation called a Registered Tax Return Preparer, or RTRP for short. They also have to pass a test, take continuing education, and they have the ability to represent taxpayers before the IRS but it‘s limited. At Roberg Tax Solutions, everyone who prepares returns is either an EA or an RTRP, meaning that we’ve all got the licenses to do our jobs. The most basic tax preparer designation is a provisional PTIN holder-but even they must do the continuing education credits.

It’s important to know that because most tax preparers out there don’t have any credentials. None. Every day I hear stories about people who used a so-called “professional” and got in trouble with the IRS because the “professional” didn’t know the tax law, or perhaps chose to ignore it.

Okay, the IRS requires that I say this: ‘The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov.’ Just wanted to make sure I got that in there.

Now I was going to write about how you don’t want to hire the guy in the crazy costume to do your taxes. But I’m not in a position to say that. You see, every Halloween, Roberg Tax Solutions dresses up and helps with the Maryland Heights Halloween parade. We used to dress up for the Pujol’s Foundation Winter Carnival too until they discontinued that.

So, go ahead and hire the tax person in a crazy costume. Just make sure that you check his or her credentials for doing taxes first. (By the way, the guy in the Shark costume is Mike, our new guy. He’s in the shark costume because, well–he’s the new guy. And the shark dance? Well, the little kids at the parade kept begging him to “Do it again!” For what it’s worth, he’s better at taxes than he is at dancing.)

Posted on March 25, 2011May 31, 2016 by Jan Roberg

Why You Don’t Want to File Your Taxes on April 15th (Or the 14th for that matter)

Photograph by Dayna Bateman

Does this sound like you? You’re pretty sure that you owe taxes this year so you’ve had no motivation to get them done. You know you have until April 15^th so all through February and March you’re not even thinking about it. April 1^st rolls around and now it’s like, “Oh yeah, I’ve got to get that done.” But life gets in the way and the next thing you know, it’s April 14^th and you’re starting to panic. You go online to do your return and realize that you’ve got some funky tax issue that you can’t handle by yourself so you need professional help. You head down to the big box tax store and wait in line with 20 other folks who are in the same boat as you.

Don’t do that!

Don’t do your taxes on April 14^th. (Okay, for 2011 the tax deadline is April 18^th, but everybody knows the 15^th is tax day even if the IRS likes to mess with us about that.) But that’s just another good reason not to file your taxes on the 14^th because you have until the 18^th this year.

But it’s more than that. More mistakes get made on tax returns on April 14^th than any other day of the year. This isn’t a statistical fact, it’s just my observation. I do audit work helping people who have tax trouble. I notice that tax returns done on April 14^th have more mistakes. Not necessarily big mistakes, but missed deductions and credits.

If you’re going into the big box tax store on April 14, those preparers are busting their behinds trying to make sure that everybody gets taken care of. They’re probably exhausted from the long hours already. If you go in at night, most of those folks have already put in eight hours at their day job already. If there’s a line of people in the chairs, the office manager is probably cracking the whip, “Let’s keep it moving people!” This is not the day that they’re going to ask you all of the questions they need to ask to give you the best service possible. They have the built in questions in their software that they’re required to ask you, but don’t expect anything above and beyond the minimum if you go in during rush time.

If you go into a big box store on April 14^th (or 15^th or one of those late days) and there’s a big line and it looks crazy, the best thing for you to do is just file an extension. If you think you owe, make a best guess as to how much you owe and pay it (keeps you from paying late payment penalties.) An extension is an extension of time to file, it does not give you an extension of time to pay. The penalty for filing late is much higher than the penalty for paying late though so even if you don’t pay, you’re still better off filing the extension than filing your return late.

If you’re at the big box store, they’re going to pressure you to file your return now instead of doing the extension. Here’s why: they get paid a commission for the tax returns they prepare during the tax season. Most of them get laid off after the last filing date. The few preparers who work during the summer get paid an hourly wage for the off season work and it’s not anywhere near the rate they get for their seasonal work. Filing your extension doesn’t pay them much if anything so that’s why they don’t want to do it.

Now if you go someplace and it’s not a mad house and you find someone there that makes you feel confident, by all means go ahead and file. Do it and be done with it. Sometimes, while the 14^th may be a madhouse, the 15^th will be quite calm and a good time to file. Use your good judgment. Don’t file a tax return while feeling panic. Fixing a bad return costs more than doing it right the first time.