Righteousness in Designation?
Friday I was interviewed and retained by a new client. This particular client has several issues that actually can fall in line with a great debate we have all been following.
First, a little background:
A young newly wedded (three years) couple has their tax return done by “pros” as they are not among those who follow the taxing world. We will call them Pat and Jody Taxpayer. Having just started their own Business they left HeRBert (the group who prepared their returns) for what to them was perceived as a tax professional. They retained a CPA to handle some general bookkeeping and complete tax returns.
Good choice?
Of course it is, “All but the militantly nefarious and hopelessly deluded concede that CPAs are experts at keeping books and records. There simply is no higher accounting “designation.” then CPA.
The CPA (Certified Public Accountant) maintained records by gaining access to Pat & Jody’s bank account using the online statements. The first tax season for this CPA came around and she completed the 2007 tax return. Another year passed, and she completed the 2008 return.
Several months ago, the IRS notified the Taxpayers that the 2007 return was under investigation. Seven lines on two different Schedule Cs were in Question.
Considering a CPA had prepared this return there should be no worries.
So how did I get this return?
When the time came for the audit with the “Tax Compliance Officer”, the CPA, had manufactured information to provide the IRS to validate two of the seven lines in question and did not show up to guide the Taxpayers through the 3 ½ hour long ordeal. Needless to say, the IRS found no substantial proof or validation for seven lines in question. P & J now are holding a bill from the IRS for over $10,000.00.
Not only are the taxpayers confused about what happened, but the “Compliance Officer” also looked at their 2008 return, they are about to undergo another audit.
“Because good accounting skills are a critical part of good tax preparation, CPAs are uniquely qualified to be tax preparers.”
So where is this CPA? Avoiding Pat and Jody.
This is a most uniquely “qualified” tax preparer?
I reviewed 2006 (again prepared by HeRBert – a fast food chain preparation service), 2007 and 2008 returns. (again, these two returns were prepared by the same “CPA”)
- 2006 had 6 errors resulting in a $213 refund to Pat and Judy (I can say this because I have already amended this return)
- 2007 has 21 errors - three missing forms (associated with errors) and if that wasn’t bad enough, 5 of the errors are mathematical.
“Good tax preparation is about numbers. It’s about keeping good books and records.
In short, it’s about good accounting.
In fact, what is a tax return if it’s not an accounting?”
Hummmmm
if anyone needs a definition to “accounting” I have a link to the right for Merriam-Webster Dictionary or you can click this.
Good thing it doesn’t suggest an ability to add or subtract.
Same for Accountant.
- 2008, well is just wrong. I say this because nothing changed from 2007 through 2008.
- 2007 consisted of
- 1040 Long Form
- 2 Schedule Cs
What the 2008 return consisted of was a 1040A – Short Form, nothing more.
My conclusion is this CPA stands proudly among those who are truly CPA tax professionals. You real CPAs who are tax pros, give her credibility she assuredly doesn’t need.
As for Jody and Pat, luckily they found a tax professional. I will help them through the amended returns, the audit up coming, and any and all IRS intervention that may come their way. If you wish to stay updated on their situation, I will create a blog page giving more detail information and will keep it updated.
However not all of you will see it this way. Why? Well, I am no longer a CPA. I am not an EA, nor am I an Attorney. What does this make me? I am an unenrolled preparer.
Unenrolled preparers, by definition, have no recognized credentials and are bound by no professional standards
And what are the unique qualifications of an unenrolled preparer?
Would someone please tell me?
Anyone?
The silence is deafening.
That’s because the answer is “none . . . nada . . . zero . . . zilch.”
The silence sir, is deafening because you are on your computer. But now, please, open your eyes fully, adjust your glasses, I want you to hear me plainly.
An unenrolled preparer is a unique person. Like a Lawyer, a CPA, or Doctor or any other profession, you are going to have unqualified hacks. My Credentials are useless in the taxing industry.
Or did you miss it?
The AICPA told a CPA/Tax Professional “We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to ‘own’. In addition, we do not endorse a particular tax credential.”
An unenrolled preparer sees how others take advantage of the miss-conceptions of the designation and learns tax rules and regs to help people through what can be a very taxing time (no pun intended).
I question your thinking when you say a man with over 35 years in the tax preparation industry has no credibility. I only have 23 so I must not have any either?
Hummmm, let’s look at my background a bit:
a) A Masters in Accounting
b) Formally employed by this countries (at the time) Largest Accounting firms
c) Formally a CPA
d) 23 years preparing returns for taxpayers
Of the four listed in my mind, only qualifies me to call myself a tax professional. I can assure you it isn’t one of the top three.
“There simply is no higher accounting designation.”
Thus, if the Internal Revenue Code imposes an affirmative duty on taxpayers to maintain good books and records, doesn’t that alone explain why CPAs are uniquely qualified to prepare tax returns and why many CPAs are drawn to the field of tax preparation?
Of course it does.”
You Pompous arrogant ass. Is your head so high in the sky that you are not getting enough oxygen?
True enough, the IRC does affirm duty to taxpayers to maintain good and accurate records. Alone that tells me (a former CPA) should seek advice from a CPA on how to keep those records not how or where to put them on a tax return.
It is my opinion that a good majority of the CPAs that are drawn to taxation and preparation do so for the money.
(Not to get off subject, but are you actually a licensed Tax Attorney, and a CPA? I know a few Lawyers and I’ll have to ask, to be sure, but I think like the AICP, there is nothing out there for Lawyers to hold actual “tax” credentials. If I am wrong please correct me, do you have some designation that says you’re a Tax Lawyer? If so, what is it?
As for not being bound by professional standards, I find it hard to understand why I have to point out to a designated pro that we (The Unenrolled prepares) are bound by the same rules in Circular 230 as you are. Maybe you should read it some time.
A while back, I post Who is: a post that defines different titles. If you want to see the entire post please click on the link Who is: Below is a brief recap:
A Tax Attorney - Typically large and even small businesses will meet with a tax attorney once every quarter or once a year to ensure that they are making the best possible business choices with regards to investments and tax issues. Since the taxation, laws change constantly.
A Bookkeeper – is responsible for keeping accurate, up-to-date business records for proper cash flow management, balance sheet preparation, and developing expansion and investment plans.
Accountants – keep track of a company’s money.
Enrolled Agent – is a federally authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.
Tax Preparer – an individual who prepares tax returns.
Other post from the “taxguy” blog that may be related to the taxpayer issue mentioned in this post.
Choosing the Right Representative
5 Worst Things You Can Do if You Get an IRS Collection Notice a Guest post from Peter Pappas. . .
How to Avoid IRS Penalties and Interest
Picking A CPA With Too Much. . .
Passing the week. . .
Well the last week of August, and a great week for bloggers.
Do you Owe the IRS?
As report by Joe Kristan from Roth & Company, PC the tax update blog, on Friday, (Owe the IRS? Your Interest rate goes up) For links to the ruling, and the rates from and to check the link above.
How to deal with higher taxes is just great. I wish I had thought to write this. Alas I would have made it sound dull. Andy over at $saving to Invest has done a job. A must read.
“Accountant fights IRS and wins!” Is another must read for you. Don’t be fooled by the intro the information is awesome. This came from Don’t mess with taxes. It seems this was hot topic too for Roth & Company, P.C., Tax Prof, Not sure what it all means then check out the great job Robert did over at The Wondering Tax Pro in his post “The feeling is Demutual”
TWTP is back but only to leave again, this time for higher education in the tax laws. New and old he’ll review to let us in on what is going on. Check out this post to find out about his last trip, OUTTA STATE, MAN!
We have a winner of the book contest from Wide Open Wallet. Way to go Tiffanie form We like money. I was trying to win the book, now I’ll have to go buy it. What was the book? Well go check Wide Open Wallet. A hit is that it is all filed under green living.
From Andy at $aving to Invest here are six reasons why higher education students must pay attention to their finances or face years of financial sorrow long after they leave school in Six sure fire ways for students to ruin their financial future.
With more on school, Patrick writes Back to School Money Tips for College Students » over at Cash Money Life.
School, school, school. I love going to school
Ashley over at Wide Open Wallet has started going back to school. In an effort to help, I have a guest post “How long to save your tax records”, I ask other bloggers to ask her or send her a guest post to help her out until she can get acclimated to her new class schedule, and back to blogging.
McCain’s seven-house money lesson post from Kay Bell at Don’t Mess with Taxes brings up some good points for couples (don’t have to be married) who share living expenses. Be sure to also read from the post The Six Financial Mistakes Couples Make (a post from SmartMoney), and His, Hers and Theirs an article Kay wrote for austinwoman magazine.
I want to thank Joe from Roth & Company, PC for mentioning the taxguy on Monday and the post Filing Status Head of Household. . .
So apparently over at the TaxProf Blog collecting tax “bric-a-brac” is a past time, first I read about a really cool tax puzzle (I like puzzles), then I found out you can buy 1040 TP. Oh my.
Nine Things to Do When the Going Gets Tough from Trent at the simple dollar is a great read, full of information and ideas.
The Wondering Tax Pro picked up on where I sorta` left off with Release of Claim to Exemption. . . with his post CLAIMING CHILDREN OF DIVORCED OR SEPARATED PARENTS. Please check it out. There is more info than I provided.
Fridays post from $aving to Invest, Andy writes Dividend Reinvestment Plans (DRIPs)- A great investment the article is part of the Finance Blog Network group writing project covering a theme, “The Best Financial Advice I Received and How I Use it Practically“. Lots of info here.
In my blogroll I would say everyone had great post this week and would encourage everyone to go through and check out all the blogs from all those I read regularly.
I’ll be adding a few more blogs to my blogroll next week one from PF and another one on tax…
The Web site experience. . .
Those of you keeping up with my company web site follies, I had a site building software (?) going but didn’t seem to work well with my server. So after a great day of personal failure I realized that I need to get it together and found similar software that did work on my server. Now although the two are similar, they are different but I at least have something that is working.
I have a few pages up now, and intend to get more up between today and the end of Tuesday, this week. However I am not as familiar with this new software and it is taking me longer to get through it all.
The other slow down is that as I re-read the pages that I am putting back up I am finding errors that are taking time to fix, along with links that are either broken or missing. It is such a slow process. And I am sure I am still missing errors because I am still hurrying along so that I can keep up with my work load.
Anyway I have a sight started and hope that by the end of next week to have at least half of it back up and running again. It is a lot fancier than the last sight but I have to figure out how all the bells and whistles work yet.
Great blogging to all. . .
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