Yesterday, I talked about one of the biggest sources of tax problems that lead individuals and businesses to hire me to represent them as their tax attorney before the IRS. If you are coming here new, please read my previous post about the ‘gotchas’ that can occur with tax software.
Today, I want to talk about the next biggest source of tax problems that my clients experience and then give you 5 ways to avoid tax problems when working with a tax preparer.
Low Price Tax Preparation Services
You know the old saying “If I had a nickel for every time a _________ I’d be rich!”?
Well, I’m not rich but I have built a successful tax law practice over 19 years because of the number of people who have been burned by low cost tax services. With apologies for my dry humor, in my practice these firms rank almost neck and neck with tax preparation software as my highest performing sales channel!
So why do so many tax problems stem from low cost tax services?
Tax Prep Services: Little price + little expertise = big problems
For the prices they charge, the reality is that these firms can do little more than type up the information you give them. These firms make more mistakes due to their relative lack of training and experience. They’re not only human after all, but low paid, inexperienced and under appreciated humans at that!
While low cost tax preparation services know the basics, real expertise and service don’t exist at this pay grade. Unless your tax return is simple, it’s my opinion that you are exposing yourself to unneeded risk by using a low cost tax preparer.
I know it’s easy to buy into the sales pitch of low price tax preparation services. As with tax software, the promise of low cost tax preparation services is something along the lines of ‘cheap, easy, fast, get your money!’
But think about it, is buying tax services like buying the store brand of paper towel at the Big Mart? Regardless of your personal level of comfort with risk taking, I’m going to ask you to reconsider your view of risk for taxes. As with Surgeons and Airplane Mechanics the repercussions of tax mistakes are much worse than a little spilled milk. Your taxes are not a roll of paper towels. Now, let’s look at how to avoid these problems.
5 Ways to avoid tax problems with low cost tax services
Don’t use them unless you’re confident in the specific preparer’s experience and training. Hiring a seasoned CPA or tax preparer isn’t much more expensive than a low cost tax service. Regardless of who prepares your taxes, there are still some critical steps that you should follow to protect yourself:
- check all the information you give your preparer (think garbage in, garbage out). The tax preparer can only work with what you give them.
- bring a list of questions or concerns to your visit with the preparer and make sure to take notes.
- follow up on any loose ends that you or the preparer might uncover
- after your tax return is finished (but before it is filed) review each section of your return with the preparer
- double check your return carefully one last time when you get home
Low cost tax preparation services aren’t out to make mistakes and cost you valuable time and money. They exist in a highly competitive, low margin business that’s extremely rough and tumble. On top of that, we all exist with a tax code of great complexity and ambiguity, a breeding ground for trouble. The realities of the marketplace and our tax system make it so, but it’s your choice as to how you manage these risks. Tax preparation isn’t the place to reduce your costs. Save that for the paper towels.
If you think you might have submitted an inaccurate tax return in error, one of my trusted staff can help answer some basic questions. If you’ve already got an income tax problem that needs the expertise of an tax attorney, I’m here to help at 1-(800) 509-2770 oremail us here.
Jeff Fouts, Tax Attorney