A TAX PROFESSIONAL
This is another of my ongoing exposes on the practices of tax
Tax professionals who are personally offended by what they read here, and
may be tempted to lodge complaints against me with the State Boards of
Accountancy, should be advised that everything included here is true and is
protected by what remains of the First Amendment to the United States Constitution.)
I have already covered the issue of selecting a tax advisor/preparer
based on what the fees are, and how that is a classic example of "you get
what you pay for."
it's just me, but I think that selecting anyone who is such an important part of
your life (attorney, tax advisor, financial planner, stockbroker, etc.) just
because s/he is located close to you may be even more ridiculous.
I guess if being able to pop in at any old time and visit with your tax
advisor is an important criterion, you can overlook the person's skill level.
However, you should also wonder about any tax practitioners who are just sitting
around twiddling their thumbs waiting for clients to drop in. Anyone who has tried to reach me on
the phone knows all too well that I do not
answer the phone, play phone tag, nor talk to anyone without an
appointment. I work 12-14 hours every day and would fall even further behind if I
were to allow such interruptions.
With phone calls, faxes, e-mail, and snail-mail, we really haven't had
any problem doing everything we need to all over the USA.
a similar vein, the selection of a professional advisor based purely on family
tradition or personal friendship is dangerous and expensive.
I've lost track of the number of people who tell me quite openly that
they are paying thousands of dollars in extra taxes because their tax advisor is
an old family friend or a high school pal who is afraid of anything aggressive
that might attract the IRS.
Heads Are Better Than One
often hear from people who say they are waiting for their tax advisor to die or
retire before they will feel comfortable switching over to someone who is more
creative and aggressive. They
believe that it is necessary to have all or nothing, with one person doing
everything. That's very short
sighted. You don't have to use just
one person to handle all of your tax projects and issues. Several people use
one for strategic planning purposes, and another for the actual bookkeeping and
form filling. Far from being offended, I welcome the input of the clients' other
advisors because I know that, as a team, we have a synergy that allows much
better overall service.
Advisors, (tax, legal or financial) who refuse to work with other members of the
team are doing their clients a disservice. The scariest thing isn't a
person who doesn't know something. It's
the person who doesn't know, yet thinks s/he does; or worse still, is afraid to
admit his/her lack of knowledge and pretends to know everything. A good trustworthy person will know his/her own limitations
and seek advice from others who are more acquainted with those particular issues.
While I consider myself to be on the
cutting edge of creative and aggressive tax strategies, I would never claim to
know everything there is about taxes. In
fact, it changes so much, I don't ever expect to be able to make the claim some
so-called tax experts make; to know absolutely every tax break there is.
It's best to run away from anyone making such claims.
Side Are They On?
older I get, the more I learn that some of the assumptions I have always held
about things are not accurate. Specifically,
I'd like to address the attitudes of tax return preparers and advisors.
I had long assumed that all other preparers and advisors had the exact
same philosophy and objectives that I had when working with clients; that taxes
are too high and that we will do anything legally possible to reduce the
clients' tax obligations.
years in the tax business, I can't recall a single time where a client asked me
to make sure he pays plenty of taxes because the government needs his money more
than he does. I must admit that I
don't explicitly ask people if they would like to pay in more taxes.
I assume that they share my belief.
However, that is not the case with other preparers.
talking with people, including other tax practitioners, I find that it is quite
common for them to believe that the American public is under-taxed and that
everyone has a moral obligation to give until it hurts.
While some of these people are former IRS employees who, as I explained a
while ago, still believe in the IRS's philosophy that everyone is a tax cheat,
this sentiment is also prevalent with many who never received a paycheck from
IRS (although you could make the case that what they are doing now is working
for IRS). In many of these people,
I detect a tone of envy. They
believe that clients who earn more than they do should pay in a lot more taxes.
think it is important that you ask your tax advisor these basic questions. You may be shocked by his/her response.
1. Do you think taxes, in general, are a good thing?
2. Do you think the American people pay enough
3. Do you think I pay too little, too much, or just
the right amount in taxes, both income and payroll?
4. Who is better able to spend our money, us or
the politicians in Washington, DC?
5. IRS -
Friend or Foe?
these questions sound facetious, you may be surprised at the answers. If your preparer refuses to answer any of them, or worse yet,
lies to you, I think it's pretty clear that you shouldn't be entrusting your
financial matters to that person.
woman recently told me that her and her husband's CPA told her point blank that
the other local residents were subsidizing their agricultural efforts because of
their tax deductions and was trying to make them feel guilty for doing this.
My question to this woman was: how can she possibly expect this CPA to do
her all in minimizing their taxes, when this CPA believes that taxes saved by
clients increase her own taxes? It
boggles my mind that someone would stay with a CPA who voices such opinions.
it's just me, but using a tax preparer who doesn't share my desire to minimize
my taxes would be like using Doctor Jack Kevorkian to treat my illness. Our separate goals would be too conflicting for me to feel at
A growing trend in the tax
profession is to outsource the actual work to less expensive workers, often in
India. You should ask any potential tax service where the actual work will
be done. If they openly reveal that they are sending work out to other
countries, and you are comfortable with that, no problem. If they refuse
to disclose any outsourcing or swear that all of your work will done locally,
how can you trust them for anything?
I have discussed this issue
in some blog posts, such as the following:
USA Tax Work By Indians
Outsourcing Jobs To India
Is your tax return being prepared in India?
Outsourcing is the new name of the tax game
This page was last
Tuesday, January 31, 2012