Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Thursday, April 13, 2006

Tax Preparation Chains - Get Real!

Wall Street Journal discusses the tax code in its op-ed and points out the number of errors tax preparers make. From personal experience I concur. I'm a CPA with many years experience. The tax code is a voluminous and confusing mess. It's job security for tax professionals but not for the light hearted and number challenged individual.
The U.S. Government Accountability Office recently audited a sample of tax returns filed by real Americans who had hired a tax preparer. More than half of those tax forms contained what the GAO described as "a significant level of errors." The GAO then traveled to tax-preparation chain stores in random towns across the country and posed as ordinary taxpayers, such as plumbers, single working mothers, and the like. Only two of the 19 accountants could fill out even routine tax returns mistake-free.
One correction! In discussing the tax chains let's be very clear. Calling the preparers "accountants" is slander to real accountants. As nice as these people may be they are usually individuals looking for extra income, retirees and single parents with no formal schooling beyond high school. A few are former white- collar workers not necessarily accountants. Some have never held a job before.
Tax chains make mistakes, huge and glaring mistakes. In my opinion these chains are shams that make a mockery of the accounting and tax profession. Block, Jackson Hewitt, Liberty Tax are all franchises who may or may not have an accountant in ownership or on staff. They provide a "school" with about 15 weeks of rudimentary education on tax preparation and very little in solving problems. It's a turnkey approach to a very demanding job.
These tax chains offer fast refunds, guarantees and charge enormous fees for the most basic return. Each additional deduction, or exemption runs the fee higher. Typical customers are the very poor who want their money fast, and are willing to pay a high fee, bordering on usury, to obtain their money. These chains attract many fraudulent customers who bring in social security cards for nephews, nieces, neighbors; anyone they can in an attempt to claim an exemption to take advantage of the system.
I agree the tax code should be simplified and only degreed accountants or tax lawyers should be doing returns. The tax code is nearly impossible to figure out. Basic returns can be done with tax software, patience and thorough reading of the instructions. If you question your ability then use a tax professional.
Stay away from the chains, spend your money wisely and attempt to get your taxes done correctly. Seek out professional accountants, preferably CPA's to do your taxes, get professional advice and don't wait until the last minute. Tax preparation is not like opening up a lemonade stand. Using Block, Hewitt or the others may require CPR and you will wish you used a CPA!

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