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Questions and answers about tax adviser practices
by Tony Novak, CPA, MBA, MT
, revised 11/21/2011
OnlineAdviser service receives a large sampling of consumer tax questions, especially during the spring tax season. In recent years we’ve noticed that the questions are often about the tax adviser, accountant or income tax preparer rather than about taxes directly. These Q&As are an attempt to encapsulate a few of these issues:
Why doesn’t my accountant actually prepare my tax return anymore?
The majority of professionally prepared tax returns are not completed by the person you deal with. Overseas processing centers and cloud-based software services have replaced U.S. accounting firm staff for the processing of most tax returns.
Most people do not actually need professional help to prepare a tax return but our tax adviser will probably complete your tax return forms on request.
Our nation’s long-term goal for filing tax returns is to have your tax return automatically prepared by accounting software and electronically filed online. In light of this, the tax adviser will likely take steps to move this automated process forward for you.
A tax adviser should help focus your attention on ways to manage and reduce your tax liability over the long term rather than the mundane task of getting the return filed.
Why does my tax adviser not sign my tax return even if he worked on it?
The role of “tax preparer” is legally different than “tax adviser”. The liabilities and responsibilities are different in the eyes of the IRS and the Tax Court.
If you have a non-CPA tax adviser who is distinct from your tax preparer, it is usually to your advantage to avoid using that person as tax preparer. A tax adviser should sign your tax return if they worked on the return.
Why doesn’t my tax adviser supply a copy of my tax return?
Most tax advisers provide a duplicate copy of the return unless corrections or adjustments are expected before filing. Duplicate unsigned copies of tax returns are a common source of errors, confusion and embarrassment, especially among people who use the tax planning process to see “what if?” under different scenarios.
It is always best to make your own copy of your return AFTER YOU SIGN IT and just before you mail it to the IRS.
Where do I mail my tax return?
The addresses for regional IRS offices are listed in the Form 1040 instructions (available at www.irs.gov).
Should I send my tax return by certified mail?
Yes, any communication with the IRS should be made by certified mail.
Am I paying the lowest legal amount of tax?
Probably not. If you were to use 5 different tax professionals, you will have 5 different amounts of tax due on the same set of income data. There is no “absolutely correct” amount of tax liability. The tax calculation typically involves a series of interpretive decisions on the nature of your transactions.
The most important issue is that you must understand and be comfortable with the decisions and interpretations used in the preparation of your tax return rather than focus only on the lowest number of tax due.
If I do something improper on my tax return, will my tax adviser report me to the IRS?
A non-CPA tax adviser does not have any obligation to report any tax position on which they do not agree. A CPA has a duty to report criminal violations under a code of professional conduct.
A tax adviser should not advise you to do something improper, but can advice on the potential consequences of different tax positions so that you can evaluate the benefits and risks associated with different actions. Of course, if you are doing something illegal, criminal law may apply and the responsibilities of any citizen with knowledge of criminal activity may be different.
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Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks “Freedom Benefits“, “OnlineAdviser” and “OnlineNavigator” but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.