I’m Back with “Who is”
Okay, things have settled and for the most part organized. Taking up this blogging thing again as before; Monday, Wednesday, Friday, with a recap of the past week on Sunday’s. I have missed being active regularly and I have been missed, but things are going strong again.
For my readers who have hung with me thank you. I apologize in advance for the repost below but given everything, I find it necessary.
So much talk about hiring a tax professional and so much debate about who is a professional I want this out again.
The biggest point I want to make is that just because someone is a CPA, doesn’t automatically make them a tax professional.
Tax professionals are hard to find because as you may have heard, there is no accreditation from the AICPA (American Institute of Certified Public Accountants) that says “Tax Professional”.
Hope you enjoy my return to active blogging.
Repost of Who is. . .
As a tax preparer I am often asked what is the difference between a tax attorney, an accountant/CPA, a bookkeeper, an Enrolled Agent, and a tax preparer.
A Tax Attorney is not the same as an accountant. The accountant can work with the financial issues and has a general knowledge of tax laws; however a tax attorney is a specialist in all aspects of tax law. Although they often work closely together, they are two complete different services. 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, this is an important step.
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. A bookkeeper also assists in filing tax returns with updated tax records. Accurate bookkeeping is a legal requirement and should be kept well within the standards that are set by local and federal tax agencies. A bookkeeper accurately records all of the financial transactions. It is the responsibility of bookkeeper to note all monetary transactions that are received and paid out. The records also include outstanding balances that the company owes to other parties and others who owe to the business. Business bookkeeping takes a lot of time and cannot be done in a hurry. At small businesses, bookkeepers also double as company accountants. Perhaps bookkeepers have the biggest responsibilities in the company as business planning, payroll management, and tax return preparations are dependent on accurate bookkeeping. Bookkeepers often do not have the qualifications or certifications of accountants, but the responsibility is not any less. Bookkeepers that have a great deal of experience can market themselves as accountants or managers. For that, they also need to supplement their profession with certificate courses, seminar attendance, and on-job training. All types of businesses require bookkeepers who are experienced in their specific business functions.
Accountants keep track of a company’s money. The company’s managers and people outside the company read their reports. Managers look at the accountants’ reports to see how well their companies are doing. There are four kinds of accountants:
Public accountants work for public accounting companies. They do accounting, auditing, tax, and consulting work. Some have their own businesses. They do many different kinds of accounting for people outside the company.
Management accountants keep track of the money spent and made by the companies for which they work.
Accountants generally work a standard 40-hour week, but some work 50 hours a week or more. Tax accountants often work long hours during the tax season, from January to April. Most accountants have a college degree in accounting. Public accountants have to take a special test as well, resulting in a certification. Public accountants also must have a special license from the State in which they live. Accountants are generally good mathematicians, and have good analytical skills.
An Enrolled Agent (EA) 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. “Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only Enrolled Agents, attorneys, and CPAs may represent taxpayers before the IRS. The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.
A professional Tax Preparer is an individual who prepares tax returns. A professional tax preparer can be a Tax Attorney, an Accountant/CPA, a Bookkeeper, an Enrolled Agent, or anyone who professionally prepares tax returns for clients. Most return preparers are professional, honest and provide excellent service to their clients.
So there you have it.
How do you choose the right one to prepare your taxes? There is no one factor to use in determining this. I suggest you read the IRS Tips for Choosing a Tax Preparer. Or my website page Finding a Qualified Tax Preparer. I would also hope you to read 5 Biggest Mistakes most taxpayers make when choosing a tax professional!
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. . .
Tax Preparer Regulation
I have been asked and asked about taxpayer regulation, and why haven’t I posted about?
In my opinion all the talk about the regulation is just hype. Meaning, Our government, in my opinion is just trying to build up how they want to work for you. All well and good, but to actually implement something is going to be a whole other story. For now, everyone is just looking at the idea.
My friend Robert (a.k.a. The Wondering Tax Pro), has several post that if you really want my opinion then look to his as he and I see this the same. Below are links to the best gab on Tax Preparer Regulation. I recommend to everyone, to read them.
From Joe K. at Roth & Company, P.C.
- Yes, I still don’t want to regulate preparers (With two in-depth comments that must also be read)
- Whither preparer licensing? (long but read it all anyway)
- Licensing tax preparers?
- IRS moves to regulate preparers
- Wasting money: what’s the big deal?
- Level playing fields?
- Taxpayer advocate calls for raising taxpayer costs, reducing preparer supply.
From Robert F. at The Wandering Tax Pro
- SO WHY DOES THE AICPA OPPOSE REGULATION OF UNENROLLED PREPARERS? (Overall my favorite.)
- LICENSE AND REGISTRATION, PLEASE (with a lengthy comment on my two cents worth)
- THE DEBATE CONTINUES . . . COMMENTS ON A COMMENT
- IF YOU WILL INDULGE ME A LITTLE LONGER
- THE FINAL WORD!
- NEVER SAY “FINAL WORD”!
From Petter P. at The Tax Lawyer’s Blog
-
Tax Preparer Regulation: A Response to Joe Kristan (Another must read.)
From Kay B. at Don’t Mess With Taxes
From Trish M. at Our Taxing Times
From Kelly P. Erb. at TAXGIRL
From Monica L. at The Tax CPA or Confessions of a CPA
From G.Christopher W at The Tax Law Report
From Dan M. at Tick Marks
Over all if you are wondering what I think, it is simple:
Everyone who hangs out a sign declaring they prepare tax returns (especially in my opinion Individual returns), should be regulated or licensed to do so. CPA’s, Lawyers, EAs, anyone and everyone.
Passing the week. . .
If you are new to blogging (as I am), Andy from $aving to Invest has a great piece you should read called Characteristics required for successful blogging. Thanks to informative post like this, I will get better at this blogging thing.
Have you ever wondered about a reverse mortgages? Andy from $aving to Invest as a great look at them in his post ”A look at the Pros and Cons of Reverse mortgages”
Blunt Money turns two! Happy blog birthday on Tuesday. In this post she mentions the book Your Money Or your Life. If you haven’t read it, why not? It may not change the way you think, but it is a great read.
From Cash Money Life Patrick has a great post on the four day work week. It’s been on the news and a lot of businesses or following this plan. Be sure to ask yourself Would You Prefer a Four Day Work Week?
Did you miss the Money Hacks Carnival No.26? Catch up here. It was hosted at Our Fourpence Worth. Who also hosted Festival of Frugality No. 139. And if they weren’t doing enough they have great advise how to Save by Not Saving on These Things. Great job all the way.
A bit of information from Roth & Company, PC. High Corporate Rates: Responses From the Left. And a great reference to a famous duck.
Keep your eye on these post if you’re thinking about your 401K. Michelle is about to start her career as a real busy person. I mentioned this last week as did TWTP on Wednesday. Follow along as she takes her skills to evaluate her own choices in her 401k. Saving for Retirement. She also did a book review on a book she (at the time of the post) was only half way through, I have given recent thought about the book and Michelle gives more insight for me to consider in her post Anticipating Grad School – Recommended Reading: Ahead of the Curve.
Wanna good laugh at Wal-Marts Expense? Check out this post from the TAXGIRL. While there read the peace titled “Does Wal-Mart Want Your Kid To Read?” or follow link from here. And incase you are wondering I am a great big hater of the Super store. Great piece Kelly.
Still no emergency fund? Shame on you. More assurances that you need one. Well Check out the poll done over at No Dept Plan “Twitter Emergency Fund Poll” and if that doesn’t help then read the (what I call ) follow up from Ashley at Wide Open Wallet “Emergency Funds”
Still more on the Government Accountability Office study released this month that found two-thirds of both American companies and foreign companies doing business in the United States end up avoiding all federal income tax obligations despite corporate sales totaling $2.5 trillion. From Kay Bell at Don’t Mess with Taxes in her post Business taxes: too much, too little. Kay goes much deeper into the situation than my piece from Friday titled A Compromise that only touched on the GAO study.
My Web site update. . .
Well I have come to the conclusion this is for sure going to take longer than I anticipated. I am a far way from computer literacy. Through a friend and contact from someone who lives very near where I once did I found Joomla! Joomla is a content management system (CMS), which enables you to build web sites and powerful online applications. And it is free.
It is all very new to me and though it boast easibility (is that a word?) it is a new concept for me in how it works. It is taking some time to figure it all out.
I have decided that losing my other site (despite the hits it was generating) was truly a good thing, in that the new one will be better all the way around. Easier on the readers eyes and easier to navigate.
The drawback is the information is currently not out there, and the time it takes for me to get it back. I am doing all this in the midst of a really busy time for me in my continuing education and other such avenues that keep me busy, like clients.
I am to the point on the new site where I am trying to find a look, one that goes with the color scheme of L & R Tax Preparation and an overall layout. Surprisingly this is taking forever as there is either to many choices or I am being way too picky.
Still Looking
I am still looking for a finance blogger to fill in on the days I am unable to get post out. I have had several inquire about it and actually had one set up for Saturday, but they no showed.
So my search continues. If you are already a blogger and have way too much to write about in your blog, lets talk.
If you are interested please go to my contact page and let me know.
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