Year End Decisions - Do You Have The Right Tax Person

Michael Lodge, NCPM, CRTP - Mediator and Business Advisor - www.lodge-co.com

Just one more month to go and it will be tax time where you sit down with your tax person and do your tax return.  Now if you are a business you should be sitting down with your tax accountant way before the end of the year.  Have you even made a call to your tax person about your 2020 tax reporting?  You should have.  But that is not what this blog is about, it was just my lecture I give business owners every single year.  What we are going to talk about is if you have the right individual preparing and advising you on taxation.

PROTECTING YOUR TAX DATA:  One of my concerns is tax preparers and are they staying up with the laws that surround them a tax practitioners.  One issue that should be a big concern is if your tax practitioner is protecting your tax data?  There are specific rules for tax preparers on protecting your tax information.  The Internal Revenue Service has specific rules on how your tax data is to be protected to safeguard the issue of fraud, people stealing your information.  Not only are tax practitioners given rules by the IRS but tax preparers are also under the Federal Trade Commission (FTC) because they are under the classification of banks.  Same rules and regulation apply to tax preparers and banks.  Think of all the data that tax preparers collect on you, almost your whole financial life is collected by your tax preparer.  So, the IRS and FTC have said that there is to be a written Client Data Security process to be published for each client to read.  Is your tax practitioner protecting you tax data?  If not - time to find another tax practitioner that does protect your information.  Look on their website where it is supposed to be published and make sure they are following what they have published.  Protect your financial and tax data and make sure your tax practitioner is doing the same.

PUBLISHED FEES:  A good reputable firm will publish their firms tax preparation fees.  This is a transparent provision for you as a client to understand what you will be charged for.  If a firm is unwilling to provide you with an estimate or do not publish their fees, expect your tax preparation fees to be questionable and you should find a firm that will discuss their fees openly and be consistent with their fees.  When I was doing thousands of tax returns, we always published our fees, even to this day I keep that fee structure posted.  Check your state, some states have very strict laws on tax preparers who are licensed under a state tax preparation program.  In the state of California they have CTEC or the California Tax Education Counsel that requires tax preparers to fulfill many requirements in order to prepare taxes in California, in fact the IRS recognizes CTEC and treats them differently when getting approved to prepare taxes under the IRS program.  Make sure that your tax practitioner is in compliance and can prepare tax returns and that he is transparent on the fees for preparing tax returns.

KNOWLEDGE:  Make sure you tax preparer has the experience and knowledge of taxation - Federal and State.  Ask them how many years they have been preparing taxes.  If they are in a state like California you can review their status with CTEC online, if there are any complaints or complaints where his tax preparers bond had been used to settle an issue.  Do you due diligence on the tax preparer, remember he or she has your whole financial life in their hands.  Make sure they know what they are doing.  Also, if you are with a tax preparer are, they keeping you informed on the new tax changes each year.  When you ask them a question, do they have an answer for you - a legal answer.  

A PRO-ACTIVE TAX ACCOUNTANT:  Make sure you have a tax accountant who is calling you from time to time throughout the year or sending you an e-mail to check about your financial or business status.  Remember, any change in your tax status will change your tax return.  Changes like getting married, having a baby, divorce, etc.  They all change your tax return, and you should be aware, through your tax preparer, how it will affect your tax return.  By the way, you as a tax filer should be pro-active and asking questions constantly.

As the laws change for tax preparers, so should the tax preparer be changing how he practices as a tax practitioner.  If you have questions or concerns about your tax preparer start doing due diligence on interviewing another tax preparer.  Remember, do what is right for you.  If they are talking to you about something you feel is questionable, walk away, it is time to find a new tax preparer.  

If you have any questions, just send me a text at 818.252.5682 or send me an email at www.lodge-co.com  Happy tax season my friends.

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