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posted on: 5/16/2006
revised: 3/10/2010
Most of the nation's tax returns are
prepared by paid professionals but reglators think that the term "professional" is
used too loosely here. The majority of the estimated 1.5 million
tax preparers in the U.S. have little or no training in law or
accounting and are not regulated by any governmental or industry
body.
A recent General Accounting Office
report listed "serious concerns" about the accuracy and quality of
tax returns by paid preparers at national tax-preparation chains.
Congress appears ready to take action, possibly by requiring
additional training and holding firm principals accountable for
errors by their employees.
Almost anybody can become a tax preparer
with a big firm like H.R. Block, for example, by signing up and
attending a training program. There are no degree
requirements, no industry experience requirements and no continuing
education requirements for tax preparers.
Complicating the problem is the fact
that the large firms use the tax preparers as front line "client
information gatherers" to be used for the purpose of marketing other financial
products after they have all of the customer's financial information
on file. In recent years the highest profits have come from
selling customers high interest refund anticipation loans.
A law that imposes additional regulation
of tax preparers seems like a good idea, but the real responsibility
rests with the consumer. Most people who use a tax preparer to understate tax liability are well aware of the misrepresentation. The number of tax preparers that deliberately
give bad advice is probably as low as the number of "bad apples" in any line of work (I would not not call it a profession).
Those who call themselves "tax advisers" should have
substantially more training in both law and accounting than a tax
return preparer. It would not be difficult to argue, for example, that
the majority of
CPAs and attorneys are not well-versed in tax law and procedures and
not qualified to give tax advice.
Major financial publications like Money Magazine and the Wall Street
Journal have shown that the odds of receiving the most appropriate response to a tax question are less than 50%
when posed to any group of professionals. Rarely would two
professionals come up with
the same amount of tax due if preparing a return for an individual with complicating issues. Still, I believe that consumers who need tax advice should look for an attorney with the
designation "LLM" or a CPA with the additional designation "MT". That designation means that the individual has spent the equivalent of two additional years of
study specifically in the area of taxation. So when an LLM or an MT
happens to give bad tax advice, at least we know that it is the best
bad advice that money can buy!
keywords: Tax adviser,
preparer
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Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved. |
