Negotiate your debts with the IRS

Posted by Bruce Mc on Jan 6, 2012 in Budgeting, Information, Opinions, Preparer | 0 comments

Choosing a tax professional to formally negotiate your debts with the IRS

As the tough new rules on bankruptcy laws hit the debt industry, debt settlement is often chosen as a more palatable option for all the debtors in the US. Debt settlement is an agreement with the debtor and the creditor to settle an outstanding balance for an amount that is lower than what you actually owe. However, there’s a huge difference between owing debt to a private organization and the government. The government can take any step to recuperate the money from you and therefore, you need to be careful about the steps that you take in order to clear your dues. Just like you settle your credit card debts, have you thought about settling your IRS tax debt? Do you know whether or not it’s possible? If answered no, read on.

What is Offer in Compromise (OIC)?

The IRS or the Internal Revenue Service has recently revised all the instructions for their OIC in 2006 in response to all the changes in the tax law under the Tax Increase Prevention and Reconciliation Act. When you’re drowning in a sea of IRS tax debt, the OIC is the only worthy way out of the tax debt cycle as you can settle your debt for an amount that is less than what you actually owe. Though there are many ways in which you can get out of debt, most debtors choose Offer in Compromise as they can get the opportunity of repaying a lesser amount.

How to choose a tax professional for completing your IRS OIC

An Offer in Compromise is a time-consuming process and most people take at least 12 to 24 months to achieve complete resolution of their tax woes. Despite waiting for the long period of time, the chances of succeeding are pretty slim. Research reveals that only 17% applicants succeed in reducing their IRS tax debt through debt settlement or OIC. Since the entire process is complex enough, there are many debtors who prefer seeking help of the tax professionals to protect themselves from unnecessary scams.

The debtors often hire a tax professional who helps them with hiring a tax professional to prepare the documentation of the entire process and also to negotiate with the IRS. The tax professionals may charge you hefty fees of about $1,500 to $3,000 for the accuracy that they’ll provide you with the Offer in Compromise documentation. The tax professional should be well-versed with negotiating with the IRS consultants as without this skill, it would become tough to manage. 

How to stay aware of the scams associated with settling your IRS tax debt

There are many unscrupulous tax professionals who will quote some unaffordable price for the offer. Such professionals may prepare the form but will not assist you throughout the documentation and will also avoid negotiating on your behalf. You should look for someone who is experienced in dealing with the revenue officers along with a pleasing personality.

Therefore, when you’re knee deep in IRS tax debt, make sure you take the best step forward to opt for debt settlement. Follow the advice mentioned above so that you can successfully complete the entire process and secure a debt free life.

This is a Guest Post by Shawn Ambrose who is a financial writer. He loves to contribute articles to financial websites, blogs and communities. Some topics covered by him are debt consolidation basics, settling your credit card debt, pros and cons of IRS tax debt settlement and so on.

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More of “Things your tax pro may not tell you”

Posted by Bruce Mc on Jan 1, 2012 in Choosing a preparer, Opinions, Preparer | 0 comments

Image by 401K via Flickr

“You wouldn’t believe it.”

Complaints about tax preparers, including allegations of inaccuracies and returns that weren’t filed on time, are up 80% in the past five years, says the Council of Better Business Bureaus. But when it comes to the Internal Revenue Service policing problem preparers, “the lifeguard is still asleep.” 

Less than 1.5% of returns get audited, and while that may pacify nervous taxpayers, audits are the primary way to catch bad tax pros. The GAO found that a year after it reported poor preparers by name to the IRS, the agency had failed to audit a single one. Professional organizations, such as the American Institute of Certified Public Accountants and the National Association of Enrolled Agents, pack even less of a wallop because they often wait for the IRS to act. Then the institute will strip membership and report bad accountants to the relevant state-licensing group.

Finding this information is a two-step process. If your CPA is an AICPA member, you can find out if he’s been disciplined by the institute by checking on the AICPA website. You can retrieve details by putting his name in the site’s search box. If your CPA has been disciplined, it’s important to note the reasons why, “There is a whole range of situations where the (institute) would discipline a member.” Those could include not returning client records, disclosing confidential client information and not exercising due care in preparing a tax return. To find out if a CPA’s license has been revoked, you should check with your state board of accountancy.

“What are your qualifications?”

Concerned about unethical, unlicensed tax preparers and what has been called “sharks in the water.” “Anyone can call himself a tax preparer.”  Many have.  At one point as many as 600,000 tax preparers were unregulated, according to the National Taxpayer Advocate, the taxpayer assistance wing of the IRS. Some set up shop in a local real-estate office, but many work for the big chains.

This all changed with the IRS RTRP program. If your preparer doesn’t have an PTIN, they are not allowed, by law, to prepare your return for profit. (This includes any CPA, EA, Attorney, RTRP anyone who prepares) by the end of this year (2012) All non-CPA’s, EA’s, or Attorneys will have had to pass a competency test.  A minimum competency test is now live and by the end of 2013, all preparers will have to pass the test in order to prepare tax returns for compensation. The new RTRP (Registered Tax Return Preparers) will also have an annual continuing education requirement of 15 hours. All the hours will be tax related.RTRP  - Ask your Representative why it is that CPA’s, and Attorneys are exempt from these requirements. I say this because As it stands now, They are not and will not be tested concerning tax issues nor will they need to take CPE related to tax matters like an EA or RTRP.

“If it’s February, you’re late.”

A savvy tax pro may be able to cut your tax bill or juice your refund. But don’t expect to find one come mid February. From that point through April, tax pros are generally too busy to talk to new clients. So if you don’t already have a preparer lined up, by the time you actually have your W-2s in hand, you’re probably not going to get good service.

This means you should be talking to tax preparers in October, November or even as late as early January. They’ll have time to answer questions, look over your old returns and suggest changes. Not only that, but talking to a tax pro in the fall means you still have time to plan. If you wait until you have all your W-2s, you’ve locked in all your income for the year. But in the fall a good preparer can help you figure out ways to manipulate your income by increasing your 401(k) contributions, deferring a bonus until the new year or taking taxable losses.

Wait until spring and a professional can help you make small decisions, like whether to itemize or think about different deductions, but you’ve lost most of your flexibility.

“Taxes, whatever — let me see what else I can sell you.”

The real money in tax prep has nothing to do with 1040 forms and W-2s. For the big-chain preparers, as well as your local accountant, the register really lights up only when they persuade you to take a loan, open a retirement account or buy insurance. Chances are you don’t need what they’re selling, but the sales pitch may blur the issue. GAO staffers reported that when they visited the big-chain tax preparers, loans were described as “options” or “bank products”; on one visit a customer was asked to sign a loan application without being told what it was. RAL means Refund Anticipation Loan.

Worse, these extras can do you more harm than good: More than 80% of those who opened an “Express IRA” at H&R Block, for example, paid more in fees than they earned in interest, according to a lawsuit filed by the New York attorney general. (H&R Block says most Express IRA accounts opened between 2001 and 2005 have yielded “positive net tax savings benefits and interest earnings,” even as the company “has lost money operating this program.”)

CPAs, too, are in the sales game, ever since the AICPA allowed members to sell insurance products. When commissions can be $20,000, it’s easy to get greedy.

“If I screw up, I’ll pay up.”

Worried about an audit? H&R Block and Jackson Hewitt are happy to ease your mind — for a price. Both offer the option of buying a geared-up guarantee that promises to cover any back taxes you owe, plus interest, fees and penalties.

Here’s what they don’t say: You don’t need the extra protection. If it turns out you owe back taxes, the big chains’ basic (read: free) guarantee already covers fines, penalties and interest. Many CPAs and EAs and RTRP will do the same; they often have insurance for that very purpose. Just be sure to ask about it before one does your return. But what about the back taxes?

True, they could amount to a bigger expense than the fines and penalties, which may be why some chains can sell that extra guarantee. But H&R Block and Jackson Hewitt will cover you only up to $5,000 and exclude the most complicated returns. If you’re tempted, know there may be an unintended consequence: If someone pays your taxes, the IRS considers that taxable income.

In other words if you buy the guarantee, and H&R Block ends up paying your back taxes, expect to get a 1099 next January.

“Tax preparation is an art, not a science.”

Recent law changes (EIC to name one) tightened penalties for tax preparers who play fast and loose with the tax code, taking far-fetched positions because they know 99% of returns never get audited. That said, for anyone with a complicated or unusual financial life, there’s still lots of wiggle room, I’ve never heard “It’s about 10% black, 10% white, and everything else is in the middle.”

Chances are good you have room to maneuver if you have income in a category the tax code treats flexibly — you’re self-employed, for example, or own rental property. Ditto if you’ve earned big capital gains or incurred high or unusual medical expenses. In short, if you’re attaching a schedule to your return, a good tax preparer will pay for himself.

Now, that may mean raising a red flag with the IRS, and a good preparer should explain if he’s taking risky positions. If you can’t stomach the specter of an audit, you’ll want a pro to travel on the side of caution.

Think twice before paying someone to look for loopholes if your income picture is relatively simple. If you’ve got one W-2, you don’t need someone fancy, there’s not a lot we can do for you.

“You’d be better off.”

Maybe you’re hiring a tax preparer because you’ve got better things to do with your weekend or numbers make you dizzy — more power to you. But if you’re hiring a pro because you think he’s smarter than you, think again. On average, tax preparers make more mistakes, and costlier ones, than John Q. Taxpayer does.

According to a study of IRS data, 56% of professionally prepared returns showed significant errors, compared with 47% of those done by the taxpayer. And audited taxpayers who used preparers owed an average of $363, while those who filed themselves owed $185.

Of course, tax preparers often see more-difficult returns, which could lead to more errors.

For a family with one W-2, mortgage interest and a couple of kids, TurboTax is just fine. If, on the other hand, you’re attaching a schedule for self-employment income or capital losses, consider getting help. And even then, if a return is made complicated by a one-time event — say, the birth of a child or the acquisition of a rental property — you might need only one year’s worth of advice. If nothing changes, you should be able to copy it from year to year, so long as you keep up with tax law changes to your situation.

“You should shop around.”

There’s no standard price for doing taxes. Some preparers charge by the hour, others by the form; either way the cost depends on where you live, the complexity of your situation and the qualifications of your tax pro. Consider: The average H&R Block customer pays about $150; a CPA may charge 15 times that.

People rely too much on word of mouth; they don’t shop prices. If they did, they might be surprised. A licensed local pro may not cost much more than a national chain. 

I charge by the form, and a simple return could cost just under $150.00 – not much more than what you might pay at a big chain.

Even among franchises, prices vary. The return that cost $90 to prepare at one big store cost more than three times that at another, according to a GAO study. To be fair, it may be hard to know what your return will cost before the preparer actually spends time on it. Ask for estimates using last year’s return — that’ll give you a point of comparison to find the best price.

 Shop around.

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The Income Statement (Profit & Loss) Part 2

Posted by Bruce Mc on Jul 15, 2010 in Accounting, Bookeeping, Income Statement, Information, Preparer, QuickBooks | 0 comments

It has come to my attention that many of you could use some help in understanding how to use your Profit & Loss effectively in managing your business. Even more so, Some of you may not even know that this is a tool to use in managing your business. So here is just exactly what the Profit & Loss Statement is good for.

The Profit & Loss Statement is your major management tool. This report shows you many things that you will want to be aware of as you are managing from month to month.

The Profit & Loss lists all your income and all your expenses. It will first list your income and then list your Cost of Goods Sold (COGS), subtracting the total COGS from your total Income. COGS are the expenses that are directly related to your service or product you sell.

For example:

 if you are a contractor, then your COGS could be your labor, the building materials, the permit, things like that.

 Each industry has its own COGS. So the number that you get from subtracting your COGS from your total income is your gross profit margin. This number is very important and helps you to determine if you are making a profit on your services or product. This is not the infamous “bottom line” though, because all companies have “overhead” or expenses that are not directly related to the service or product.

For example:

your accounting, the receptionist, taxes, office supplies, and many other expenses not directly related to what you do or sell.

So after you have subtracted the COGS and the overhead expenses from your income, that is what your net profit is for the month or the infamous “bottom line.”

There are many things to be aware of and to look for on your Profit & Loss in helping you to manage your company. The following is a Top Ten list:

1. Did I make a profit? If so how much?
2. Use your Profit & Loss to determine your financial viability, not your online bank balance. Small business owners think that if they have money in the bank, they are good. The problem is that your bank account is only one facet of your business at a specific point in time, and your Profit & Loss will provide you with the overall picture.
3. If I did not make a profit, why?
4. Did we spend too much on a given expense, like tools? Computer repairs? Cell phone fees? Meals out? Advertising?
   1. You can see this at a glance as a total for each expense category on your Profit & Loss.
5. How much income do I need to break even?
6. How many months have I lost money?
7. Based on your numbers, you will be able to tell if you need to get a loan.
8. Do you need to lay people off?
   1. You can determine this from this Statement.
9. Do you need to make your company more efficient in order to break even or make a profit?
10. Based on your income numbers, you might find one income source essentially non-existent and another is booming. This will give you direction on what to promote, what to put your money into and what not to.

So as you can see, your Profit & Loss will provide you with crucial info in the management and direction of your company.

You can use your Profit & Loss to help with many facets of the business. But as you may have figured already, it is very essential that your accounting/bookkeeping be accurate, because if the accounting is off, then these reports are incorrect and therefore, worthless. If you have QuickBooks and do not know accounting, it would be good to outsource the review of your books and maybe the entry of your transactions to a reliable accounting/bookkeeping service, so that you can have effective tools in your tool bag and have control of your business.

Understanding what to look for and how to use it can save your company in tough times and make your company extremely profitable in the good times.

Related articles

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• Profit and Loss, By Leontia Flynn (independent.co.uk)
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Choosing a Payroll Provider —

Posted by Bruce Mc on Jun 25, 2010 in Choosing a preparer, Opinions, Payroll service, Preparer | 1 comment

There comes a time in every small business owner’s life when they start thinking about moving payroll from their living room computer into the hands of a hired professional.

View L & R Tax Preparation Payroll Video

Shopping for a payroll professional, as well as anything else, requires a little research.

Having just moved my company largely online with on line everything (including payroll) I thought I should put some information out for everyone. So, here are some key questions everyone should ask themselves before choosing a payroll provider.

Before you commit to a payroll provider, ask these questions.

1. What type of payroll provider service will address my needs best?

With traditional payroll services, you phone in, e-mail or fax your payroll information every pay period. These methods require you to establish a set time every pay period for you to submit your payroll. Traditional services also calculate taxes and other deductions and offer various payment methods for employees.

Online payroll has been available for nearly a decade. This service usually allows you to enter payroll hours from one Web site and will make all payroll tax calculations and deductions. Paycheck stubs and W-2s are available for employers and employees on a secure Web site, and direct deposit is usually included. Some, can and will file and pay payroll taxes on your behalf. (L & R Tax preparation now offers this service)

Payroll software, like online payroll, allows you to enter payroll information at your convenience and will perform necessary calculations. However, you are responsible for debiting your bank account, printing checks or arranging for direct deposit and handling IRS penalties and notices.

2. What are the biggest concerns about outsourcing payroll?

Most people agree that payroll would be an easy if it weren’t for payroll taxes, withholdings and other calculations such as 401k, or accrued leave time. If you don’t want to stay on top of strict IRS rules and regulations, choose a payroll service that will do the work for you.

Additionally, if you’re considering software or a phone/email/fax solution to process payroll, make sure they offer direct deposit. You’ll save your employees time, and you won’t have to be in on payday to hand out checks.

Although you probably won’t think of it immediately, online access for pay stubs and payroll records can save hours of tedious work. If an employee has ever asked you to provide the last six months worth of pay stubs for mortgage purposes, you know the advantages of offering employees self-service payroll accounts.

3. What if something goes wrong?

If it’s important for you to be able to speak with someone on the phone when you have a question about payroll, ask if they offer live, U.S.-based customer support. And if you’re one to work on Saturdays, you’ll want to make sure someone will be available to assist you then.

Phone support can be a lifesaver if you receive IRS penalties and notices. It’s not uncommon for businesses to receive these penalties or notices in error. If you don’t want to be on the phone directly with the IRS resolving the issue, make sure your payroll service has tax experts who will work with the IRS on your behalf.

Fitting in time for a call about a small payroll question is not on most small business owners’ lists of top priorities. Make sure your payroll service offers a comprehensive, easy-to-use online help database.

4. How does outsourcing my payroll help me stay in compliance?

Many services calculate payroll and provide direct deposits but don’t handle payroll tax deposits or filings. They may say they assist with those tasks, but if you want the most inconvenient and riskiest part of payroll off your plate, make sure your provider will deposit and file federal, state and local payroll taxes on your behalf.

If payroll taxes are the riskiest part of payroll, new hire reporting is the second. In a recent poll, 95 percent of business owners were not aware that federal and state law mandates that all new hires be reported to the state in an appropriate amount of time. To alleviate worries about compliance, select a payroll provider that reports new hires automatically.

Some payroll services offer more than payroll compliance. For example, your business must post the appropriate labor law posters. If you don’t want to worry about costly fines, ask a potential provider about labor law posters and poster updates.

5. Is it worth it?

Regardless of the method you choose — phoning-in, e-mailing, faxing, or entering payroll online or into software —outsourcing payroll is always faster and more reliable than doing it by hand. Homemade spreadsheets are useful, but a transposed number or erroneous formula can translate into a payroll nightmare as you try to rectify an employee’s pay and amend taxes.

If there’s one thing you can always count on changing, it’s tax laws. And they don’t always change at the beginning of the year. Outsourced payroll, even payroll software, spares you the burden of keeping up-to-date with ever-changing tax tables.

Some closing thoughts.

Outsourced payroll is the same as other outsourced services: You can’t put a price on more time to grow your business and service for your clients. That’s not to say the most expensive payroll service will provide you with the most free time. For example, traditional payroll services are usually the most expensive, yet they require you to set aside time during normal business hours to fax or phone in payroll. Likewise, the cheapest provider may save you money but will likely leave you scratching your head trying to decode payroll tax and compliance laws.

Look for the provider that meets your specific needs. Don’t pay for a service that charges for extras you won’t use. Likewise, don’t try to save money by selecting a service that meets just most of your needs. You want a service that handles all your needs. When you find the right payroll service, the benefits will justify the cost

Electronic Filing Mandate

Posted by Bruce Mc on Jun 11, 2010 in Choosing a preparer, Filling Status, Preparer, Tax Preparation | 0 comments

The IRS has been making changes to the Electronic Filing Mandate that originated in H.R. 3548 as  predicted when it first came out.

At this point in time they are saying for this next tax season they “anticipate” asking requiring preparers who do 100 or more returns to file electronically and then lower that threshold to 10 for the next filing season.  They are doing this because they expect low volume preparers may need more time to get signed up and familiar with the process.  They will also be looking at a waiver process so if there is an extreme hardship for a tax preparing firm they may obtain extra time to get into compliance.  They are also stating that taxpayers may need some convincing so if a tax client wishes to opt out there may be a way to do so.

As you can tell there is a lot of “supposes” and “may be’s” in this statement……the IRS isn’t completely finished with what they are planning for this next tax season.  As I hear more, I’ll make sure to update you.

A little Professionalism, if you please.

Posted by Bruce Mc on Oct 19, 2009 in Choosing a preparer, Information, News Flash, Opinions, Preparer | 10 comments

          Earlier this past week I noticed a post⁽¹⁾ from a blogging colleague. I mention this as although his said intentions were set and designed to inform taxpayers, I found not only a few things wrong with the post, but also felt like the post was an attack. The attack was not to just a good blogging friend and colleague, but to other such professionals as well. Moreover, I am not just referring to tax professionals. 

Please, let me explain better. 

          There has been an ongoing, somewhat group, discussion about the pending and upcoming regulation of tax preparers. In the post referenced above it is clear that the subject is surrounding this topic. 

          It is clearly pointed out “Although these tax preparers may in some cases be quite competent. . . in the author’s  own right, he continues with “. . . the fact is (the highlight is mine) they are unregulated and not answerable to a direct regulatory authority or held to an objectively determined set of standards.”

I argue this. I argued this point a while back and do so still today. 

          I have written many posts, and a series of posts and guest post, covering the topic at hand, hiring a competent professional preparer. ⁽²⁾ However, taxpayers, we are finding, still manage to find those preparers who, well for the sake of not having a longer post than necessary, are plain unworthy. 

          However, let us back up a bit. First, to be clear, what/who that is being discussed, is what the IRS classifies as an “unenrolled tax preparer”. (Defined below)

          Now then, let us correct the highlighted statement above. It says clearly,  “. . . they are unregulated and not answerable to a direct regulatory authority or held to an objectively determined set of standards.” 

Yes they are. 

          Let me say that more informatively, quoting from IRS Publication 470 Limited Practice Without Enrollment: 

            First lets understand what IRS Publication 470 is:

      “The purpose of this revenue procedure is to prescribe the standards of conduct, the scope of authority, and the circumstances and conditions under which an individual preparer of tax returns may exercise, without enrollment, the privilege of limited practice as a taxpayer’s representative before the Internal Revenue Service, pursuant to section 10.7(a)(7) of Treasury Department Circular No. 230”

           Okay as I read the above, IRS pub 470, and revenue procedure 81-38 has a purpose. This purpose – to “prescribe the standards of conduct, the scope of authority, and the circumstances and conditions under which an individual preparer of tax returns may exercise, without enrollment” By all rights, that should end the argument there, but no, let’s keep going. 

          For a moment lets go back to our highlight, is says unenrolled preparers are unregulated. Since definitions are important –by way of Merriam-Webster Dictionary

Regulated means:

      1 a : to govern or direct according to rule

      b (1) : to bring under the control of law or constituted authority (2) : to make regulations for or 2 : to bring order, method, or uniformity to 

So unregulated would be the opposite of the above quote box, accurate? 

          If I put this all together, I see that according to this IRS publication, Unenrolled prepares are regulated by the IRS as prescribed within Publication 470. Therefore, to say they are not is, well, not accurate.

          Surely, we can all agree that the IRS is a regulatory authority. Humm, I would think yes. 

          Thus, one may conclude that the IRS is the regulatory authority over all unenrolled preparers. Yes? 

      “Sec. 3. Applicability.01 This revenue procedure, issued pursuant to section 10.7(a)(7) of Circular 230, applies to all unenrolled individual preparers of returns who seek to represent taxpayers, within the United States, before examining officers in the Examination Division of an Office of a District Director of Internal Revenue or in the Office of International Operations.”

       Clearly, this publication applies to all unenrolled preparers. 

      “.02 This revenue procedure does not apply to attorneys, certified public accountants, or agents who are enrolled to practice before the Internal Revenue Service. The rules governing the practice of such persons before the Service are contained in the provisions of Circular 230.”

        Clearly this publication does not apply to attorneys, certified public accountants, or agents who are enrolled to practice before the IRS. 

So now we know what this publication is for and who it is for. 

      Okay, so if you turn to page 2 of this publication, Section 7 is titled, Ethics and conduct. But wait according the post ⁽¹⁾  unenrolled preparers have no such guidance.

       Sec. 7. Ethics and Conduct .01 An unenrolled preparer shall act in such manner as not to commit any act of disreputable conduct. Disreputable conduct includes, but is not limited to, the items contained in section 10.51 of Circular 230. 

          Wow, unenrolled prepares are held to the same ethics and standards of conduct as all those who are regulated by Circular 230 Regulations Governing the Practice of  Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers before the Internal Revenue Service. 

         My point here? Well, the post that questions unenrolled prepares does so with the premise that unenrolled preparers are not “held to an objectively determined set of standards.” 

         Although IRS Publication 470 Limited Practice Without Enrollment is out dated and needs to be updated, the premise of what it states is clear, within this publication are the rules and guidelines for which unenrolled preparers are being held to an objectively determined set of standards.

          And within that document, if one is truly in the know about IRS rules and regulations, they know unenrolled prepares are held to the same high standards in Circular 230 as those for whom it was written for, prepares of tax returns.   

          When I first read the post, I asked the author, “Are you Serious?” The response: “I am dead serious. What part of what I wrote do you disagree with?”  Well, I think above I covered much of what I disagree with. He continued with “What is your definition of a “profession?” Now in the post, he defines this for us by way of Merriam-Webster Dictionary:

       1 a : of, relating to, or characteristic of a profession b : engaged in one of the learned professions c (1) : characterized by or conforming to the technical or ethical standards of a profession (2) : exhibiting a courteous, conscientious, and generally businesslike manner in the workplace.

 Lets add his other definition:

       Investor Words.Com defines profession as, – An occupation, especially one which requires an advanced education.

          A profession is indeed an occupation. A professional then would be one who held an advanced knowledge of his/her profession. Yes? 

          Now here is where he and I will bump heads so to speak. Could the forklift operator of 30 plus years be a professional, because he does his/her job, proficiently? He/she may have been trained, yet he/she may have many years of experience doing this job. If experience were the best teacher, would not years of doing the same thing repeatedly, at some point, make him/her a professional fork truck operator?

          My colleague says no. “The reason for this is simple and obvious: No impartial third party regulatory body has determined his core competence.” Really? What of the dancer, the actor, or musician and comic? So what of the landscaper? What of the carpet cleaner? Are they truly not professionals because no “impartial third party regulatory body has determined there core competence”? Not the same thing? I beg to differ, it is. These are all professions, and they all are called professionals.

          By what he is saying, Paul McCartney is not a professional. Disagree? Then please point out for us what impartial third party regulatory body has determined his core competence in music. Remember he says “impartial”

Going back to Merriam-Webster Dictionary:

      impartial – not partial or biased : treating or affecting all equally 

Sadly, I fear my colleague sees only white-collar professions, by the definitions that are posted on his site. 

          Yet my biggest problem of all, this post drags a good friend and colleague, down to mist of the idiots. He will not see this and that is fine.

      My grandmother is very much as he is, really the only difference in the two, is she is over 90. I have to wonder then if he, like her, believes that one should not wear black all the time.

          She told me once that professionals do not wear black all the time, in her mind only convicts and truck drivers wear black all the time. That very same year Jeff Goldblum (a professional actor), in an article voiced that he always wears black.

      Hummm that story should be for another time.

           Anyway, I felt obligated to share the post with my friend. In turn he wrote “I AM A PROFESSIONAL!”

           And in good debate-like a lawyer form, this post was written Professionalism: The Cafone’s Rebuttal.

          For which I asked him, “Was this really necessary?” referring to did he really truly feel he needed to continue the professional insult to our colleague, my friend.

The reply:

\”Bruce, I suppose nothing I write is \”necessary.\” But I thought it was appropriate given the recent proposals by the IRS to regulate unlicensed tax preparers.

And in response to your email, I didn’t personally attack anyone. You and Robert, more than anyone else should want IRS regulation of preparers so you can differentiate yourself from all the shmucks’ out there who call themselves tax pros. I never once said or implied that Robert or you are NOT excellent tax preparers. After reading your blogs, I’d refer clients to you myself.rt, more than anyone else should want IRS regulation of preparers so you can differentiate yourself from all the shmucks out there who call themselves tax pros. I never once said or implied that Robert or you are NOT excellent tax preparers. After reading your blogs, I’d refer clients to you myself.\”

           I politely thanked him for any referrals sent my way and left it at that other to let him know I would be writing this post. (This can be seen on my facebook page) 

          Before I was able to get this post out, two more post were published. Profession Defined is a post that in a clearer manner, explains or defines the word “profession”. Then this, Beware the Unlicensed Preparer. 

          Sadly, I found this in poor taste. Believe what you will about “the unregulated or unenrolled preparer”.

Try this:

I challenge any attorney, tax or otherwise, CPA, EA, or what have you, whom are clearly defined in Circular 230 and not living in California, Oregon, Maryland and New York (After 01/01/2010), or other such States – show me your license to prepare tax returns. 

Well?

Humm.

I wonder, if you are following the words being said;

“IRS Commissioner Doug Shulman says the agency is working on a series of recommendations that are meant to increase taxpayer compliance and improve the work of tax preparers. Those recommendations may include a call for all paid tax preparers to be licensed in the hopes of “reducing mistakes and combating fraud.”

          That includes everyone, CPAs, Attorneys, EAs, and unenrolled preparers alike. Then at that point, those who will be licensed will be all of it. Meaning, the unenrolled preparer is going to be added to the list of folks who “are” allowed to represent taxpayers100%.

          Or is that why some of you are so defensive and abrasive to those who are unenrolled? Your pissed because not only will you, the Tax Attorney, or you, the CPA, or you, the EA may have to get a license (maybe, the ground rules are still not set), but you’ll no longer have the market on representation of taxpayers before the IRS.

          News flash, monopolies are illegal. Taxpayers need to know the truth about the misconceptions within those ranks. Others are just as / can be as capable of taking the tax classes being held at those reputable universities. Earning CPE in taxation, and as pointed out, ethics.

          Aside from the required CPE that Attorneys and CPAs are required to take, there are only a few true differences between what they can do and what an unenrolled preparer cannot.

          I would also point out that the Attorney isn’t required to take CPE in taxation. The CPA isn’t required to have taxation CPE. The only ones in the IRS group of specialist that are required to take CPE in taxation are, EA’s.

          For those of you in those ranks whom I have or may have or may later offend, I am not a part of your click, been there done that, unimpressed.

Don’t like it?

FO!

Learn to be civil.    

(1)     Who is a Professional?

(2)     Choosing a preparer – this link will take you to post that appear here (this blog) covering this. There are 24 in all.

 Reference material:

• IRS Publication 470 Limited Practice Without Enrollment
• Publication 4019 page two. It is not a list per say but will show plainly the “differences” of form 2848 and form 8821.
• The Unenrolled Return Preparer Limited Practice without Enrollment Rev. Proc. 81-38

Definitions:

• unenrolled tax preparers – An individual who prepares and signs a tax return as the preparer, or who prepares a tax return but is not required to sign the tax return.
• Practice before the Internal Revenue Service – comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service. Such presentations include, but are not limited to, preparing and filing documents, corresponding and communicating with the Internal Revenue Service, rendering written advice with respect to any entity, transaction plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion, and representing a client at conferences, hearings and meetings.

21 Questions you MUST Ask to Choose the RIGHT Professional to manage your Taxes

Posted by Bruce Mc on Jul 15, 2009 in Choosing a preparer, Opinions, Preparer | 8 comments

Image via Wikipedia

by Nick Hodges

          The Internet super-highway opens up marvelous opportunities for you to harvest tax advice and information from some of the greatest minds at reasonable prices from anywhere in the world.  But it also emphasizes a crucial question:  How do you know whom to trust?  Sharing your intimate, personal financial information with a stranger is problematic at best.  

Here are 21 questions to help anyone choose a tax and/or a financial professional you can trust. 

1. Physical office.  Do they have a physical office that you can visit?  Even if you never have to meet them face-to-face, the professional integrity required of a firm conducting a bona fide business should be considered.
2. Reachable contact person. Is there an actual person who will be ultimately responsible to take care of you and your financial world?
3. Valid licensure. Does their home state licensing board affirm that the tax professional you would like to use has an active license in good standing?
4. Clean history.  If the tax professional is also a registered investment advisor, does their state or the SEC affirm that they have a clean history? 
5. Age of business. How long have they been in business?  If they are too new, they may not have the experience necessary for your unique situation.  If they are nearing retirement, they may not have the interest to stay current with the changing regulations.
6. Size of practice.  Are they a sole-practitioner?  Or do they have an entire team of professionals to help serve you?  If you are dealing with just one practitioner, what do you do if something happens to them?  Do you know who will help you if the IRS decides to coming knocking at your door?
7. Experience of a professional, how big is too big?  Will you have access to the senior professionals in the firm, or are you working with firms so big you are just getting the inexperienced junior preparers?  Those who work at large, international corporations often have the opportunity to use large, international accounting firms, and pay thousands of dollars just to be ignored by inexperienced junior preparers.  Larger is not always the better choice.
8. Reputation of firm.  Does the firm specialize in keeping and building long-term relationships with their clients?  Do you know what are their clients are saying about them?  
9. Related services.  Does the firm offer other services to help you so you can get the “one-stop financial shopping” you need?  If so, what are they offering?  How do they help you understand which services you really need?
10. Name recognition.  Are they nationally-known in their industry? Do they teach other tax professionals?  – The best way to really know something is to teach it to other professionals.
11. Online presence.  Do they have a website?
12. Ongoing support.  Can they continue to help you after you return to the US?
13. Entrepreneurial support.  What if you start a business? Can they continue to help you?
14. Tax forms.  Do they know the proper use and filing of forms. More importantly, can they explain them to you in simple enough terms to help you really understand the tax challenges of your situation?
15. Fees charged.  Are they charging too little for you to receive the quality, professional service your situation requires?
16. Quote for service.  Are they charging too much (sometimes thousands of dollars), or do they hesitate to give you an upfront quote?
17. Personal interaction.  Will a live person speak to you before they take your money?
18. Tax organization.  Will they provide you with a specialized tax organizer to help you gather all the information you are going to need?
19. Tax law updates. Do they send out a newsletter to keep you updated on tax law changes?
20. Information sharing.  Will your personal, private information be shared with outsiders or shipped out of the country for processing?
21. Comprehensive coverage.  Do they offer to go beyond just getting the numbers right, to working with you to get the answers right for your entire financial world?

           Take the time to thoroughly interview the tax professionals you are considering to help you manage your taxes.

          This simple step, interviewing a tax professional, could save you from creating sticky situations in the filing and management of your taxes. 

Nick Hodges,

President of NCH Wealth Advisors

          The above post was edited. I did so in order for this guest post to be relevant to all taxpayers looking for a tax professional. For more very relevant information please see my post Find a Tax Preparer that is right for you, Should I do my own taxes. . ., Choosing a tax preparer. . ., More on “finding a pro”. . .

Also check out my series on the subject that starts with Mistakes Made. . .