What type of Tax Professional are you hiring this season?

Yes, it’s almost that time of year again!  Time to be thinking about the upcoming tax season and begin gathering together all of your receipts, invoices, income documents (W-2’s, 1099’s, etc.).  Where will you be taking all this information?  What type of tax professional are you hiring this season?  Have you even thought about that yet?  Has anything changed in your life this year over last year?

Oh, I know, you’re going to use the same ol’ guy (or, gal) you used last year, right?  Does that person have any credentials behind their name?  Credentials? You ask.  Like what?  Well, are they a CPA (Certified Public Accountant), an EA (Enrolled Agent), or a JD (an attorney)? Or, are you going to be using someone at one of the storefront tax offices, like, H&R Block, Liberty Tax, or Jackson Hewitt?  Or, are you going to be using your neighbor or co-worker who just bought tax software and says they know how to use it?  Or a friend at church who prepares taxes only from January to April 15th?

Please allow me to clarify the “credentialed” tax preparer from the “non-credentialed” tax preparer. CPA’s are the most common tax preparers you’ll run across.  They are licensed by their state, have a degree with a certain number of college hours in accounting and have passed a rigorous 3-day exam. The exam covers a multitude of areas, such as, auditing, management accounting, and about 12 – 14 questions on taxes. Many of them work in firms that also perform certified audits for large companies, banks, non-profits and government entities.  CPA’s also may perform representation of clients before the IRS or other governmental entity. They also must take a certain number of continuing education classes annually to maintain their license. CPA’s have been in existence since the mid-1950’s.

Many attorneys prepare taxes for their clients and they also may represent taxpayers before the IRS or other governmental entity.

EA’s, or Enrolled Agents come from varying backgrounds, but, all must pass an extremely rigorous IRS examination over a 3-day period.  This examination covers nothing but taxes.  The IRS calls EA’s, “America’s Tax Experts” (those are not my words but come from the IRS). EA’s possess the broadest of licenses as they are allowed to practice and represent taxpayers before the IRS in all 50 states.  They, too, must take a certain number of continuing education classes each year to maintain their licenses. EA’s first came into existence in the 1870’s, during Reconstruction after the Civil War.  I’m proud to be an Enrolled Agent with many, many years of experience representing taxpayers with serious tax problems.

A common thread among CPA’s, lawyers, and EA’s is that this is their career and not a part-time gig during the tax season. So they will be available to you should you need help in the off-season.  And, they all must take continuing education courses to maintain their respective licenses.

Have you received any tax notices this year telling you that you owe more taxes?  Or, that you’re being audited? If you have experienced this or are now going through this, then, I recommend you seek out the services of a “credentialed” tax professional, a CPA, a lawyer, or an EA.  Those tax preparers who work for H&R Block, Liberty Tax, or Jackson Hewitt or any other “non-credentialed” preparers are not trained or qualified to represent taxpayers before the IRS or the state governmental tax authorities.

Please allow me to share with you some of my experiences along this line.  Several years ago, a fellow came into my office with a tax notice from the IRS.  He’d used a non-credentialed preparer from his church, but, sadly, that preparer only worked from January through April 15th and was not available to help this gentleman now in the off-season.  I took the notice from the gentleman and called the IRS to find out more about this situation.  What I found out was shocking!  This fellow owed a couple of years of taxes, though, he said that he was certain his preparer had filed the returns.  IRS begged to differ!  Well, what started out as a perceived “simple” fix, turned out to be three years of unfiled tax returns needing to be prepared and filed.  Luckily, the gentleman had Forms W-2 to prove his wages and withholdings, so he did not owe much to the IRS or the state. But he had paid the preparer to file his returns, but that had not been done! This could have turned out far differently had the man not come to see me when he did!

Last year in the first week of April, an old friend came to see me who had not ever been a client previously, however, his preparer had moved away from this area and had gone out of business.  This friend told me he had cashed in an annuity the previous year but had paid the taxes on that income late.  He had incurred a penalty of over $60K because of that and was very upset about it!  I asked if he’d contacted the IRS to discuss this with them.  No, he said, he had not because he did not want to wait on “hold” forever! (Does this sound familiar to you?) Well, I told him I have a special number that I can call and discuss this with the IRS.  So, while he was still in my office, I made the call and, believe it or not, within thirty minutes(!) I had talked with an IRS agent and had secured a refund of $60K for him!  I used the First Time Abatement (FTA) provision in the IRS code to get him that refund!  He was ecstatic!

These are just examples of what a true professional can do for you! I hope you can see the benefits of using a “credentialed” tax professional!  Why not give it a try this year?

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