Don’t Assume Your Tax Preparer Is Limiting The Amount Of Taxes You Pay

Many business owners put blind faith in their tax preparers. They assume the tax preparer will automatically take steps to limit their business taxes. These same business owners are shocked when we tell them they are due a large refund. Consider the following:

• In 2000, the IRS caught and corrected 357,000 computational errors on tax returns filed by tax preparers. [USA Today - March 31, 2003]
• The General Accounting Office found: "Tax preparers poorly serve taxpayers through a variety of problematic actions and inactions. For example, tax preparers may fail to adequately probe and understand taxpayers individual circumstances." [GAO-03-610T]
• In the same report, the General Accounting Office noted one tax preparer that filed a return that cost his client to overpay taxes by $6,200 annually or $18,600 over three years.
• Another example found by the General Accounting Office was a tax preparer that consistently prepared business tax returns that had a taxpayer overpaying taxes by $3,500 to $5,000 a year.
• The General Accounting Office even found one return where a tax preparer missed deductions amounting to $19,000 in just one year. That equates to $57,000 over three years!

Do you still believe your tax preparer is different? As yourself these questions:

• When was the last time your preparer sat down and discussed your business in depth?
• Did your alter your business approach, product, service or employee benefits in the last three years and not tell your preparer?
• When was the last time your preparer suggested a plan to lower your business taxes?
• Do you ever complain that you are paying more than you should?

In a famous study that makes tax preparers cringe, Money Magazine sent out tax returns and quizzes to tax preparers. The results were nothing short of appalling. On one occasion, 50 tax preparers were asked 10 basic tax questions. Not one answered all 10 correctly. Only 34 answered half of the questions correctly.

The results of the magazines annual tax test were even more disturbing. At least 30 tax preparers were sent records of an imaginary family and asked to compute the tax due. Here are the results:

You are reading the numbers correctly. In 1998, one tax preparer reported that the imaginary family owed $37,715 while another reported $68,912 was due. These answers were based on the same information! Even more amazing, not one of the 46 tax preparers in the 1998 study came up with the same answer! 

You are probably thinking, "How can this be?" The answer has to do with time. Simply put, tax preparers have significant time management problems. Consider the following:

• They prepare an average of 480 tax returns between February 1st and April 15th each year.
• Put another way, they create an average of 6.5 tax returns per day.

Talk about a time crunch! As you can see, they simply don't have time to conduct an in depth review of your finances, much less keep abreast of new tax deductions. The time crunch is so bad,  some tax preparers have even been sending tax returns overseas for preparation without telling you.

On February 22, 2004, the Associated Press reported that accountants were expected to send between 150,000 and 200,000 tax returns to India for preparation. No, they didn't tell their clients this would occur. How comfortable are you with giving people in India access to your financial information, not to mention your social security number? Anyone heard of identity theft?

So what should you do? Contact us now to find out how much you have overpaid. We will get it back without exposing you to any risk of an audit.

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