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Lions and Tigers and IRS Notices Oh My
Open Your Tax Notices
By Stacie Kitts, CPA
Once upon a time, a long time ago, I knew a taxpayer who was afraid to open correspondence from the IRS and accumulated a pile of letters hoping it would all go away. It didn’t and bad things happened.
If you receive correspondence, open it right away while there is still time to do something about it.
Most of the time correspondence from the IRS is no big deal – you forgot to report some investment income, or you made an estimated tax payment a little later than your were supposed to so you owe some interest.
Honestly, I can’t think of many things you should be worried about when the IRS comes a-callin unless…..
- You’re a crook and you know it
- You don’t have advisers or you don’t listen to them
- Someone was feeding you a line that was to good to be true. Wesley Snipes is a good example of what not to believe. Mr Snipes failed to file several years of tax returns based on the advice of shyster tax preparer and is now serving time in jail.
Getting a letter from the IRS informing you of an audit of your tax return can be distressing. And let’s face it, even if you did everything hunky dory, it can be costly to have someone represent you.
There are things you can do ahead of time to help mitigate the cost of an audit should you win that lottery.
- Choose the right tax preparer. Do your research and make sure they are qualified to help you
- Have your accountant look over your accounting records before the end of each tax year.
- If you have a business, make sure you give details of your accounting transactions to your preparer. (full general ledger detail)
- Do some tax planning with your tax professional
- Keep records of your income and deductions organized and easy to find
- During the audit process – provide your representative the requested information timely and as organized as possible. Messy records are not going to help you and will likely drive up the cost of the audit.
The IRS published the following points they think you should know if you receive a notice.
- Don’t panic. Many of these letters can be dealt with simply and painlessly.
- There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
- Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.
- If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
- If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
- If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left part of the notice. Allow at least 30 days for a response.
- Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. Have a copy of your tax return and the correspondence available when you call.
- It’s important that you keep copies of any correspondence with your records.
My morning drive with Rush Limbaugh – OMG His Tax Knowledge Cracks Me Up
Love My Morning Drive With Rush
By Stacie Kitts, CPA
I’ve considered myself a bleeding heart liberal Democrat ever since I knew what a Democrat was, an interesting political choice for a successful business owner / Certified Public Accountant living in the OC. But an even more interesting dichotomy is how much I enjoy my morning drive listening to the lunatic ravings political commentary of Rush Limbaugh.
I can’t help myself. It’s like comedy hour really.
Now I know there are a lot of people who like Rush and that’s okay, I’m not judging. However, this morning he was so over the top that I couldn’t resist making him the subject of this blog post.
In the spirit of full disclosure, I must admit I arrived at work before Mr. Limbaugh’s ranting commentary concluded so he may have redeemed himself later in his broadcast.
Here is what I thought I heard – no quotes here because I am recalling this from memory.
- Obama wants to tax the rich by increasing the 15% tax rate that many wealthier Americans enjoy on the sale of their investments. ( I have also heard this point made on several other news broadcasts)
- The 15% tax rate is a double taxation because wealthy Americans have already paid taxes at a 35% rate on the money they invested.
**********
First, I want to start this discussion by helping my readers to understand that different types of income are taxed at different rates. (I promise I will get to Rush’s points – I can hardly wait to tackle those) This varies from the regular tax rates that you might be familiar with.
So the basic tax rate schedule looks like this for 2011:
|
Tax Rate |
Single |
Married Filing Joint |
Married Filing Separate |
Head of Household |
| 10% | Up to $8,500 | Up to $17,000 | Up to $8,500 | Up to $12,150 |
| 15% | $8,501 – $34,500 | $17,001 – $69,000 | $8,501 – $34,500 | $12,151 – $46,250 |
| 25% | $34,501 – $83,600 | $69,001 – $139,350 | $34,501 – $69,675 | $46,251 – $119,400 |
| 28% | $83,601 – $174,400 | $139,351 – $212,300 | $69,676 – $106,150 | $119,401 – $193,350 |
| 33% | $174,401 – $379,150 | $212,301 – $379,150 | $106,151 – $189,575 | $193,351 – $379,150 |
| 35% | Over $379,150 | Over $379,150 | Over $189,575 | Over $379,150 |
But here is what you may not know – tax law has all kinds of exceptions. In addition to the “regular” tax rates mentioned above, there is a whole host of other tax rates that might apply to your income.
Many of these “exceptions” are a decrease to the regular tax rates. For example:
- Qualified dividend income starting in 2003 and ending in 2012 has a maximum tax rate of 15%.
- Long Term Capital Gains income (selling stock you held for more than 12 months for example) is taxed at a maximum rate of 15% from years 2003-2012. The maximum rate increases to 20% in year 2013.
Income types that will increase your tax above the regular rate are:
- Self employment income (so if you are a business owner, you will likely pay more than the “regular” rates)
- Penalty taxes for early withdrawals of retirement investments (so if you pull money out of your 401K before you are eligible you will pay more than the “regular” rates)
Other exceptions to the regular tax include:
So what is the argument?
It is simply this – working American’s, the ones who “work for a living” and are likely receiving a paycheck and Form W2 at the end of the year are paying taxes at a higher rate than individuals who make most of their income from investments. In addition, those American’s receiving a paycheck are also paying Social Security and Medicare taxes on top of the regular tax.
And why does this equate to the wealthiest Americans pay less tax? As Warren Buffett pointed out, working Americans don’t have the “extra” funds to invest. Middle America spends the money earned from their jobs on day-to-day living, not on investments that could earn income at a lower rate.
I like visual aides so here is one to help make the point:
If you are married and filing jointly and your taxable income after everything you can deduct, is $70,000 (and assuming all your income came from your paycheck) you will pay to our government in the form of Federal Taxes 25% of your income – on top of the social security taxes withheld from your check.
| Married Filing Joint |
Income |
Total tax including social security) |
| Joe Tax Payer | 70,000 |
$21,700 |
| Warren Buffett | 70,000 |
$10,500 |
Now that you know a bit more about how the tax system works – I hope – here are my answers to what Rush implied:
- Obama wants to tax the rich by increasing the 15% tax rate that many wealthier Americans enjoy on the sale of their investments .
Well, no Obama wants to tax income earned from investments similar to the way working Americans are taxed. Does this equate to taxing the rich more? More than what? -If most of your income is coming from investments – More than now – YES. More than the average American – well DUH NO.
- The 15% tax rate is a double taxation because wealthy Americans have already paid taxes at a 35% rate on the money they invested.
First, how does Rush know that wealthy Americans paid 35% on the income they invested? As we have learned, there are all kinds of ways income is taxed. And second, you only pay tax on the net profit – the increase in the value of the investment after you sell it and have control of the cash. The amount used to purchase the asset is subtracted from the profit to come up with the taxable amount and therefore is NOT taxed twice. (see post script)
Post Script: It appears Rush’s comment on the 35% rate relates to income that is taxed at the corporate level before being distributed out at dividends or capital gains.
The tax policy blog explains:
The reality is that capital gains and dividends are taxed at a lower rate at the individual level because this income has already been taxed at 35 percent at the corporate level before it was distributed to shareholders. Both Mr. Obama and his tax advisor Warren Buffett seem unaware that the U.S. has the 4th highest overall tax rate on dividend income among the largest industrialized countries in the OECD at 49.5 percent. Only Denmark (56.5 percent), France (55.9 percent) and the United Kingdom (54 percent) tax dividends at a higher rate.
So here is my take on the argument above:
If I earn money from my job (for which I pay taxes) and I take my money (lets say $1.00) to the grocery store and buy my dinner, then the grocery store takes my $1.00 and adds it to their profits (for which they pay taxes) leaving oh say $.85 – and then they buy merchandise from a vender using my $.85 and that vender adds it to their profits (for which they are taxed) and so on and so on. My dollar, or portions of my dollar were taxed over and over and over.
When a corporation makes a profit it pays taxes, just like I do. A corporation is considered a separate person distinct from its shareholders. So in the same manner as the rest of us, it takes some of the money it makes and its spends it. When it distributes its “profits” to pay investors (investors get dividends – its a perk of ownership and an incentive for them to buy the stock) those investors pay taxes on the income they receive in the same manner (all be it the investors get a tax break) as the grocery store does when I take my $1.oo profit (for which I have already been taxed) and buy my dinner.
I’m still struggling to understand why the profits that I distribute from my job to others are different than the profits distributed by the corporation.
Related articles
- Buffett Rule: Not so simple (money.cnn.com)
- Are rich taxed less than secretaries? (msnbc.msn.com)
- Buffett’s blunder (opinion.financialpost.com)
- Buffett Rule: Easier Said Than Done (businessweek.com)
- ‘Buffett Rule’ for Millionaire Tax Seen as Easier Said Than Done – San Francisco Chronicle (news.google.com)
- The Buffett Rule and Taxing the Ultra-Wealthy (fool.com)
IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t it just give you the chills?
Choose A Tax Preparer That Has a Clue
By Stacie Kitts, CPA
Here it is, what all un-registered (non CPA’s, attorneys, or enrolled agent) tax preparers have been waiting for. The specs for the competency test that will award those who pass the title of “Registered Tax Return Preparer.”
Wowwee doesn’t it just give you the chills….
No – well maybe that’s because CPA’s and attorneys can sign tax returns even if they don’t have a single clue what they are doing. They get to do this without passing a test (other than the initial licensing exam which he/she could have taken a hundred years ago – so not even relevant today) or taking a single hour of tax related continuing professional education. You know, training that would keep you up to speed on the actual tax laws that apply to tax return preparation.
So what do you think the odds are that many of these licensed “professionals” would have a difficult time passing the new competency test?
Ya, scary jacked up regulation that leaves out a large number of people who are trusted to prepare your tax return.
Fixing the mistakes of these so called professionals is a large part of my practice. I guess I should be grateful instead of loosing my mind over the absurdity of it all.
WASHINGTON — The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.
The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.
The specifications identify the major topics that will be covered by the test, which will be available starting this fall. Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.
The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.
Test vendor Prometric Inc. worked with the IRS and the tax preparer community to develop the test. The time limit for the test is expected to be between two and three hours. The test must be taken at one of the roughly 260 Prometric facilities nationwide.
To assist in test preparation, the following is a list of recommended study materials. This list is not all-encompassing, but a highlight of what the test candidates will need to know.
- Publication 17, Your Federal Income Tax
- Form 1040, U.S. Individual Income Tax Return
- Form 1040 Instructions
- Circular 230, Regulations Governing Practice before the Internal Revenue Service (rev. 8/2/11)
- Publication 334, Tax Guide for Small Business
- Publication 970, Tax Benefits for Education
- Publication 1345, Handbook for Authorized IRS e-file Providers
- Form 6251, Alternative Minimum Tax – Individuals
- Form 6251 Instructions
- Form 8879, IRS e-File Signature Authorization
Some reference materials will be available to individuals when they are taking the test. Prometric will provide individuals with Publication 17, Form 1040 and Form 1040 instructions as reference materials.
The fee for the test has not been finalized but is expected to be between $100 and $125, which is separate from the PTIN user fee. Currently there is no limit on the number of times preparers can take the test, but they must pay the fee each time. Individuals must pass the test only once.
Only certain individuals who prepare the Form 1040 series are required to take the test. Attorneys, Certified Public Accountants and Enrolled Agents (EAs) are exempt from testing and continuing education because of their more stringent professional testing and education requirements. Also exempt are supervised employees of attorneys, CPAs, attorneys or EAs who prepare but do not sign and are not required to sign the Form 1040 series returns they prepare and individuals who prepare federal returns other than the Form 1040 series.
Approximately 730,000 return preparers have registered and received PTINs in 2011. Approximately 62 percent do not have professional credentials. The IRS does not yet know how many preparers will fall into other exempt categories, but those individuals will be required to identify themselves when they renew an existing PTIN or obtain a new PTIN beginning in October 2011.
The IRS will notify those preparers who have a testing requirement and provide more details. Once the test is available, preparers who have on-line accounts can use their accounts to schedule a test time and select a Prometric site.
At the time the current version of Publication 17 went to press, there were certain tax benefits that had not been finalized and several tax benefits were subsequently extended. See Legislative Changes Affecting the 2010 Publication 17 on IRS.gov for the details needed for study purposes.
Recovering Bubblehead- Unfortunately, There is No 12 Step Program
Ally McBeal the unrecovered Bubblehead
By Stacie Kitts, CPA
I like to think of myself as a recovering recovered bubblehead. You might know the type, she was portrayed by Calista Flockhart in the late 90’s as Ally McBeal. The character was described as “annoying and demeaning to women (specially professional women) because of her perceived flightiness, lack of [knowledge], short skirts“, and….. well you get the point.
As ridiculous as it sounds, there was a time – a long time ago in a galaxy far far away – when I thought I had found the right combo. Often sporting an outfit that only Ally McBeal (an imaginary made up TV person, so like no real person should have tried to pull this off) would wear, I was, sadly, the “sexy” CPA.
Ludicrous, I know!
This style choice did not endear me to my female colleagues. And had you met me in those days, you might not have noticed that I had a brain at all. This, of course, is not the impression you want to make when your brain is what you are selling.
Flash forward ……. now we are visiting my solo “stay home” tax practice period. This quarter decade represented my relaxed period, where comfort was my style of choice. My old warn out sweats and stylish jammie sets worn around the home office probably earned me the label of “comfy” accountant. Also, NOT the serious accountant image you want to project, particularly when you are trying to convince a person who has amassed a considerable amount of wealth that you are the advisor who is going to help them keep it.
Interestingly, of these two periods, the comfy accountant was/is the hardest to overcome – a few enlightening moments, and some mentored wisdom eradicated the “sexy” CPA fairly quickly. But taking the comfy out of accounting was like a slow excruciating death.
Even so, it’s done. These days I work in an office building and I look forward to casual Fridays where I can throw on some jeans with my conservative cardigan. I might even spice it up with some colorful shoes or fun jewelry. But for the most part, first impressions are my main concern and my style choices scream I’m confident, educated, serious and professional.
~~~~~~~~~~~~~~~~~~~~~~~~~~
The Blouse
Your fashion choices actually play a large part in selling you and my own fashion history is testament to this.
Being a recovered fashion bubble head probably explains why I recently had a slight meltdown when my assistant commented on how cute my suit was but added, “Your top makes you look like a big orange pumpkin.”
Let me explain.
That morning I had arrived at work wearing a conservative black suit over a cute orange top with cute orange shoes carrying my cute salmon colored purse. Just the right >pop< of color. I felt completely prepared for my big pitch to a large potential client. I was clear on the tax issues and confident in my ability to sell it. But that was before I realized that my clothing choice looked like a Halloween inspired disaster.
I hurried to the bathroom where I stood in front of the full-length mirror and thought, Oh-My-God, she’s right. Why did I pick orange and black? I look ridiculous.
Now my confidence is waning. I can’t get the pumpkin image out of my head. How was I going to sell ME and MY skills when I looked like “that” lady. You know, the one that can’t possibly own a mirror because if she did she wouldn’t be wearing that!!!!!!
My head starts to fill with possible solutions: go home and change – nope not enough time, swap blouses with a co-worker, nope not an option, run to the mall – yes there might be enough time for that there’s one right across the street. I gathered all the paraphernalia I needed for the meeting, business cards, portfolio, flyer about the company etc. and head out.
I found parking rather quickly and felt the relief flooding through my system. I ran toward the door and pull on the handle. Locked!!! It’s locked. I look at the hours – “OPEN 10am”
10AM?
10AM, what? …..Shut down by my lack of knowledge about mall hours.
I pulled out my cell phone and click a button so I could see the time. 9:30 – No time to wait until it opens, find an appropriate blouse and still get to the meeting on time.
I’m screwed, I’m screwed, I’m screwed.
Despondent, I slowly slink back to my car and try to convince myself that, it’s no big deal, you can still sell it, it’s not that bad, forget it. Ya right, I was a wreck. So as I headed toward certain rejection, I resolved myself to make my pitch just the same.
But miracle of miracles, not only did I arrive early to the meeting, but by some grace of god, the meeting was across the street from a mall. A mall that was open!
It wasn’t too late, I might pull it off. I am elated, rather giddy in fact. I top the escalator and see just the perfect thing. How wonderful. I try it on and it looks great. Stepping out of the dressing room, I spot a manned sales register.
Hello, I’m in a hurry can you ring this up for me really fast?
I am sorry dear, but we just opened and it will take some time to get the registers up.
HUH, really, what? There’s noo time? NooooTime!
At this point, I’m thinking run, run with the cute blouse, go ahead make a dash for it…..it’s your only hope….It was amazing the amount of thoughts that flowed through my mind in those few seconds. Could I get away with it, I would come back later and pay, maybe she would hold onto my wedding ring for collateral.
And then…..
She must have read the desperation in my expression because she says, “Wait, I think the register over here is up. Let’s see.” And glorious day, it was.
Sporting my new blouse with renewed confidence and relieved that I wasn’t a fugitive from justice, I arrived in time, made my pitch and yes, landed the client.
Hurray, disaster averted- thanks to the right first impression and my cute new blouse!
Messing with Their Taxes Creates All Kinds of Bad for a San Juan Couple
Avoid a Crime Scene and hire the right accountant
By Stacie Kitts, CPA
When I read a story about someone who appears to have been messing with the tax system for some thirty years, it makes me wonder…..who in the heck did their taxes, and why did it take so long to get busted.
The Orange County District Attorney is reporting that James and Dorothy Klinger, owners of Jamo’s Gardening and Modern Tree Services Inc. are charged with 28 counts of failing to file a return with intent to evade tax, 28 counts of willful failure to pay taxes, and some felony counts for lying about their business to a worker’s compensation insurance company.
These two are looking at spending the rest of their lives in prison if convicted.
They appear to have used an old school tax crook technique and kept two sets of books. You know, one that showed the “real” dollars and one that was a work of fiction.
Was it worth it? You decide….
They are accused of underreporting about $3.6 million in income and $3 million in wages. This translates to about 1.9 million that should have been paid over in taxes (give or take) that they got to keep – for a little while anyway.
I don’t know about you, but $2 million isn’t enough money to risk a 40 year prison sentence. Am I Right!?
Related articles
- Anonymously ‘squeal’ on tax cheats (dontmesswithtaxes.typepad.com)
- Top 10 tax tips from CPAs, also known as Letterman’s annual spoofing of taxes (dontmesswithtaxes.typepad.com)
- IRS Reminds Taxpayers How To Provide Earthquake Relief For Japan (staciesmoretaxtips.wordpress.com)
- 2011 Depreciation Deduction Limitations – (and a classic video from The Cars) (staciesmoretaxtips.wordpress.com)
Jason Blumer CPA, He’s a Funny Guy
Jason Blumer CPA, the managing shareholder of Blumer & Associates is a funny guy. No really. It’s true. There is proof.
I also really like his website:
We believe your numbers are simply telling stories about the relationships, processes and knowledge running deeply through your business and life. The production of numbers is not the end goal of our firm. We are here to bring clarity to the reasons why your numbers are what they are. We are a next-generation firm, and we are doing this all over the dang world!
That’s some nice copy – wish I had written it! AND according to Accounting Tomorrow – Jason is the second place winner in the Atom’s Got Talent Video. Congratulations Jason!
Tax Professionals Must Now Pay The IRS For The Right to Prepare Tax Returns PTIN’s Are Now For Sale
People filing tax forms in 1920
Stacie Say: Well, now a tax professional must buy the right to prepare a tax return. I suppose this isn’t any different from having to pay a fee every year to renew my CPA license. Just one more thing to add to my overhead costs.
WASHINGTON — As part of an initiative to ensure that tax return preparers are competent and qualified, the Internal Revenue Service today issued final regulations requiring paid tax return preparers to register with the IRS to obtain a Preparer Tax Identification Number (PTIN). A new online application system to obtain a PTIN is now available.
All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN.
Access to the online application system will be through the Tax Professionals page of IRS.gov. Individuals who currently possess a PTIN will need to reapply under the new system but generally will be reassigned the same number.
“Getting a new, industry-wide registration system in place is essential to our efforts to improve the standards and oversight of tax return preparation,” said IRS Commissioner Doug Shulman. “These efforts are essential to the future of the nation’s tax system. This will create higher standards for the tax preparation community and ensure quality service for taxpayers.”
The IRS set up a special toll-free telephone number, 1-877-613-PTIN (7846), that tax professionals can call for technical support related to the new online registration system.
Applicants will pay a $64.25 fee to obtain a PTIN, which will be valid for one year. As part of that fee the IRS will receive $50 per user, as authorized by final user fee regulations issued by the IRS today, to pay for technology, compliance and outreach efforts associated with the new program. And a third-party vendor will receive $14.25 per user to operate the online system and provide customer support.
Receipt of a PTIN will be immediate after successful online registration. Or a paper application may be submitted on Form W-12, IRS Paid Preparer Tax Identification Number Application, with a response time of four to six weeks. Before registration, applicants should consider that the date the PTIN is assigned is established as the annual renewal date.
Individuals without a Social Security number will also need to provide one of the following: Form 8945, PTIN Supplemental Application for U.S. Citizens Without a Social Security Number Due to Conscientious Religious Objection, or Form 8946, PTIN Supplemental Application for Foreign Persons Without a Social Security Number.
The new online registration system and final regulations are part of a series of steps underway to increase oversight of federal tax return preparation.
In January, Shulman announced the results of a comprehensive six-month review of the tax return preparer industry, which proposed new registration, testing and continuing education of federal tax return preparers. With 60 percent of American households using a tax preparer to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term. Currently, many return preparers do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.
Work on Testing, Continuing Education Components Continue
The start of the PTIN registration process begins as the IRS continues to review the testing and education components of the return preparer initiative as recently announced in proposed regulations that would amend Treasury Circular 230.
The proposed Circular 230 regulations announced that attorneys, certified public accountants and enrolled agents would not be subject to additional testing or continuing education requirements in order to obtain a PTIN. These professionals are currently subject to strict professional standards of conduct and ethics.
Pending finalization of guidance, the IRS has under serious consideration extending similar treatment to a discrete category of people who engage in return preparation under the supervision of someone else — for example, some employees who prepare all or substantially all of the return and work in certain professional firms under the supervision of one of the above individuals who signs the return.
The IRS will provide guidance defining this area in the coming months, and will continue to seek feedback during this process to help ensure the creation of a fair, equitable oversight system that minimizes burden.
On the continuing education requirements, the IRS recognizes the need to have transition rules in place and plans to issue additional guidelines by the end of the year.
For more, see the Tax Professionals page on IRS.gov, which features an FAQ page on the new registration system and who needs a PTIN.
Preparer Terror – It’s Real – How to Prevent It
Image via Wikipedia
By Stacie Clifford Kitts CPA
A phenomenon affecting tax return preparers often proceeded by recurrent nightmares centered around tax return preparation. People experiencing Preparer Terror may exhibit the following symptoms:
- Extreme anxiety and temporary inability to remember simple tasks such as how to spell your name
- Being jolted from sleep accompanied by an overriding desire to run to the office
- Weight gain or if you’re lucky weight loss
- Constant fear that you are forgetting something – like what return was I working on, where did I put that piece of paper, who am I – ya know stuff like that.
Ways to prevent Preparer Terror:
- Set the proper level of client expectations.
Let your clients know the drop dead due date for receiving 100% of their tax documents. If I receive tax documents after my due date, I let the client know that I might not be able to file the return on time. I will try my best. I’ll even stay up all night. But there are only so many hours in a day. If your stuff arrives late so might your tax return.
- Evaluate your level of staffing.
If you have a tax practice, the notion is that you have some idea how long it takes to prepare a tax return. Um maybe not. Sometimes partners are so far removed from the daily prep grind that they have NO idea how long it should take a staff to prepare a return. The general rule for me is if I can prepare a return in 8 hours, a new staff may take 3 to 4 times that amount of time. So partners, listen to your staff when evaluating your staffing levels.
- Be organized.
Well duh, you say. Well ya this is a duh moment. When your mind isn’t working and you are on the verge of losing it, knowing how and where to find the information you need might save you. So if your administrative staff is responsible for filing stuff away, you had better make darn sure your processes, and procedures are being followed like their lives depend on it!
- Set clear expectations of your staff.
The other day I was visiting a CPA firm, it was pretty late at night, and there were partners and staff in the office working away. Then an extraordinary thing happened, the staff up and left before the partners.
In my day, leaving the office before the partners created a clear and present career danger. It just wasn’t done. I am all about work life balance, heck my kids grew up in my office. However, if you want to have some sort of lasting career in this industry – might I suggest that you get permission before leaving the office during busy time?
Making sure your staff understands what it really means to OWN a project and take responsibility for its completion is an important part of not only managing your firm but also helping to prevent Preparer Terror.
Related Articles
- National Society of Accountants Opposes Any Tax Preparer Exemptions from Proposed IRS Rules (eon.businesswire.com)
- New Rule Strengthens Tax Preparer Enforcement (eon.businesswire.com)
Stacie's Tax Tips and Other Stuff 