Buyer Education I

As the debate rages on the licensing on tax preparers, I would like to indulge in a small taxpayer education series. Most are issues that I hope will be covered as part of the public education of the new licensing law. The first one isn't and will probably be the most controversial as I want to take on some marketing lines many preparers (including myself) use. The issue isn't the actual talking point but either making it a stand alone criteria or not understanding the spin involved.

Titles Don't Mean Nuthin'

Now that I have your attention let me back up and qualify that remark. Titles don't necessarily mean what we assume them to mean. I am an Enrolled Agent. That means that I passes a killer tax test and background check and maintain the status with continuing education. That does not automatically mean I know how to prepare an actual return. The study guide I used to prep for the EA test had a testimonial from someone who passed the test on the first time with an average 80% correct, and bragged that they had never prepared a return. There are CPAs who specialize in accounting audits and do just a few returns or focus on corporations and not individual returns. As you check into a tax preparer, initials after their name can be a good indication of tax return skill but you've got to dig further.

The same goes for the big chains. Some have good preparer training but that doesn't mean that individual preparer is following the rules or should be doing that type of return. What initials and the big chains have in common is a perceived accountability. There is someone to hear your complaints. If you have a problem with a preparer at a chain you can work your way up the corporate ladder. You can file a complaint with the CPA's or EA's licensing organization. It may not do any good but you can try.

And we all know that just because someone has given themselves a fancy title or claims to be an expert, like Joe Doe the Tax Refund King, only means they gave themselves a title.

Experience Isn't a Good Teacher...

unless you are willing to learn. I have 21 tax seasons under my belt and done over 10,000 returns. Each year I am confronted with new issues and forms to learn. Continuing ed is a major part of off season.  But there are preparers who don't keep up with the changes. At least once a year, I see a return prepared using rules from 5 years or more before. The client comes to me because their beloved preparer retired, died, is too far away. As I review the prior year return, the clients tells me about the preparer and they have been doing returns for 10, 15, 20, 30... years. And the return is wrong. There are good preparers who have just started and tax fraud artists who have been doing it for years.

No News Doesn't Mean the Return Is Right.

Recently, I have seen a couple of websites where the tax preparer used the lack of IRS audits against their clients as proof as their quality. Being audit free is good but we all have to be realistic that it could just be we haven't gotten caught. We all make mistake or have clients who lie to us and, as a result, the return is incorrect. For example, I catch an error on a new client's prior year return and point it out to them and 70% of the time they will say, "But the IRS didn't catch it." The implication is that, therefore, I must be wrong and the deduction is okay. Nope. Sad thing is the IRS can't catch all the errors that could appear on a return. Example, client with a business has been taking a deduction for their draw. That mistake won't be caught by any of the automated checks. Even if a live person sees the entry, it might not trigger a closer look unless the discription seems out of place. Now, if the return gets pulled for audit, the taxpayer is in trouble (and it opens up back years too). 

What Does That Leave Us?

I have tried to poke holes in a few marketing myths that tax preparers use to get you business. None should be used as a stand alone justification for your business but become part of a whole gestalut of who is a good fit for you. What are their qualifications, how long have they been in business, what types of returns do they prepare, who actually prepares the return, what continueing education do they do each year (and staff if they have one), if they do returns by hand are the returns neat and professional, if they don't e-file why don't they, what professional organizations do they belong to, what support materials do they have on their desk? Ask your friends and family who they use to prepare their return and are they happy with them? There is no one "right" answer but asking the questions gives you facts and impressions you need to pick a preparer who is someone with whom you can work. Don't be blinded by the talking points they want you to know.