16 May 2017
I didn’t really “fire” the last CPA I used to prepare my taxes, but it was clear from our final conversation that he was not going to be rehired the next year. I had already determined I should be getting more for my $700 than access to someone I had to teach how to prepare my tax return.
He was a poor communicator, which made him a horrible fit for someone providing me a service. I tend to have a lot of questions about my money, and since my taxes are my money, I had a lot of questions. He didn’t want to talk to me at all. I don’t think it was just me. I don’t think he liked to see any of his clients. He had me upload my documents to a web portal early in the tax season. When I went to pick up my completed return (the first time) it was waiting for me with his receptionist. A big fat envelope with my tax return in it and the signature sheets (and my bill) stapled to the outside. The receptionist showed me where to sign and asked how I’d be paying. I wasn’t offered the opportunity to review the return. I wasn’t even offered a chair. Sign here. Pay up. Get out.
Not my style.
I opened the envelope and my eyes went straight for the bottom line. Right away I knew something was wrong. My income was similar to the previous year, but my tax bill was considerably higher. It took me about 2 minutes to find the error. I showed the receptionist, who was, of course, clueless. The CPA was too busy to see me then, so I left a note about the error and left everything with the receptionist.
He emailed me later that day to tell me the tax return was correct – that the error I found was not an error. I emailed him back a link to the IRS pub explaining the IRS rules on the matter. He waited a day and then agreed the return needed to be corrected.
A few weeks later I went back to sign the corrected return. Once again it was waiting for me with the receptionist. I checked to be sure the error was corrected. It was, and the bottom line on my tax return looked like a reasonable number. I signed the e-file authorization forms and then looked at the bill. He had added $125 for fixing the error on my tax return.
I told the receptionist there was no way in H377 I was going to pay an additional fee for finding a mistake and having it corrected. She was again clueless. The CPA was again too busy to see me. I again left a note. I took the e-file forms with me and left everything else. He e-mailed me later to say he had subtracted the extra $125 from my bill. A few days later I went back and finished the signing-and-paying procedure. The CPA’s door was open this time, so I stuck my head in to make sure he knew exactly where our client-practitioner relationship stood.
That was many years ago, but that story came back to mind recently as I was reviewing a tax return with a client. A very nice seasoned citizen, she had had her taxes prepared by a CPA firm for many years. She was looking for a change, and her financial planner recommended me. I was showing her how her adjusted gross income was calculated when she interrupted me:
Client: What you’re doing is remarkable.
Me: What’s that?
Client: Explaining my taxes to me. No one has ever done that before.
It was her use of the word remarkable that stuck in my head later. Remarkable? That indicates I was doing something out of the ordinary. A tax preparer explaining someone’s tax return to them before asking them to sign it ought to be altogether ordinary. The tax payer is responsible for the contents of the return no matter who prepared it. They need to at least be a little familiar with its contents.
I also like to review a tax return with a client because we make a formidable team when we go over a tax return together. I am an expert on taxes. You are an expert on you. Those two things merge on your tax return. Going back to my CPA story, I was able to see something was amiss with my tax return almost immediately the first time I reviewed it because I knew it was very different from my prior year return. That was knowledge the CPA lacked (although he had a copy of my prior year return).
Reviewing the return with the client also gives us the opportunity to discuss tax planning strategies for the coming year. Sometimes it even segues into a general financial planning discussion, allowing me the opportunity to recommend some additional services to the client.
Also – and I hate to admit this – clients make good proofreaders. I type thousands of social security numbers and birth dates each tax season. I have a process to catch my typos, but even so a few sneak by. I much prefer having them caught by the client when we review than to have a return bounced by the IRS because the data was entered incorrectly.
It got me wondering why a tax preparer would prefer not to review a tax return with the client. My only explanation is it’s a money issue. I read tax professional practice management articles, blogs, and forums online. Some tax pros are reporting staggeringly high numbers of tax returns completed in a season. They must forgo reviewing the return with the client in order to attain such a high volume of tax returns. That’s not how I want to operate, but if their clients are satisfied I suppose there is no harm being done.
On the other hand, the client might just find it remarkable to have their tax return explained to them.