Tuesday, August 2, 2011


In the past I have made the following statements of fact in my posts here at THE WANDERING TAX PRO.

(1) Just because a person has the initials CPA after his/her name does not mean that he/she is competent or current in the preparation of federal or state income tax returns.

Similarly, just because a person has the initials JD after his/her name does not mean that he/she knows anything about the preparation of 1040s.

The only initials that currently have any bearing on competence and currency in the preparation of 1040s is EA, which stands for Enrolled Agent.

I believe it is a mistake for the IRS to exempt CPAs and attorneys from the testing and CPE requirements of the new tax preparer regulation regime, and that it is a disservice to individuals with these initials, as well as the taxpaying public, not to allow them to acquire the new initials RTRP (Registered Tax Return Preparer).

A person with the initials CPA or JD after his/her name may be the best tax preparer in the country, but that distinction has to do with the specific education, training, experience, continuing education, and temperament of the individual and nothing to do with the possession of the initials.

(2) In 40 tax seasons of preparing 1040s I personally have never used expensive and flawed tax preparation software to prepare individual income tax returns. At this point in my career I have no intention of starting now. I am comfortable preparing tax returns manually, and can prepare them quickly and accurately this way.

I have no problem with the majority of tax return preparers who use tax preparation software, as long as they have an independent knowledge of tax law and remain current via CPE.

I firmly believe that all tax returns prepared by tax professionals using tax preparation software need to be carefully checked for accuracy. One should not automatically assume that a tax preparation software program has prepared a correct return. The same process that is used to check and double check a manually prepared return should be used to check and double check a computer-generated return.

I also firmly believe that the best way to initially learn how to prepare 1040s is to actually prepare 1040s - manually. Once the education has been completed the new preparer can certainly elect to use tax preparation software in his practice.

(3) It is bad tax advice to recommend that every single business entity, including every single sole proprietorship, should incorporate solely to avoid being audited.

Operating, or filing taxes, as a corporation is one option that is available to the business owner. However operating, or filing taxes, as a corporation is not the correct option for all business activities. As is the case with any tax or financial matter, before making such an important, and potentially expensive and agita-generating, decision a business owner, or any individual, should carefully consider all the facts and circumstances of his/her particular situation.

There is no blanket tax advice, other than “don’t cheat”, that applies to all taxpayers in all situations.

I do believe that most business activities should organize as a Limited Liability Company (LLC) for liability protection.

Lawyers make money by incorporating businesses and serving as "Registered Agents".

(4) The genre that has become known as “reality tv” is pure excrement. It provides no legitimate entertainment value, or any kind of “socially redeeming value”, other then to demonstrate that there are a lot of idiots out there.

When I discuss “reality tv” I am not referring to legitimate documentaries or to home improvement programs, such as those on HGTV or DIY, or “wardrobe improvement” programs like WHAT NOT TO WEAR, which do not purposefully and constantly humiliate and berate those whose wardrobe is being critiqued, or legitimate talent competitions, again where the sole purpose for the show’s existence is not to humiliate and berate participants.

Those who watch these offending reality programs possess low intelligence and poor self-esteem.

(5) I am not a fan of, or a participant in, “social media”. I do not have the need to make my personal and private information available to the “great unwashed masses”. If I want to share pictures and videos with family and friends I can send them an email. I cannot think of any circumstance where I, personally, would participate in Facebook or My Space or similar venues.

I do not see the value to a business in having a Facebook page, when having a website for the business is a much better method of promotion and business development.

I do participate in Twitter. I use Twitter to promote my writings and as a resource to keep up-to-date on the posts of fellow tax and personal finance bloggers, online tax-related articles, and IRS developments.

I have never “dissed” individuals who have embraced social media, nor have I ever called them “idiots” or “mental midgets”. I have merely stated my reaction to the phenomenon - it is not for me, I do not understand its attraction to others, and I have absolutely no interest in the more socially-related common “tweets” that I come across.

(6) I welcome comments from readers who may disagree with the above statements and are willing to engage in a serious, intelligent and responsible discussion of the issue or issues. I always attempt to remain professional in my writings, and have engaged in many excellent dialogs and debates with competent and intelligent fellow bloggers, fellow tax preparers, and readers here at THE WANDERING TAX PRO over the years.

I have never maintained that I am 100% correct 100% of the time, whether on tax or other matters, nor that my word is "gospel" – nor do I think that because a person disagrees with me he/she is automatically an “idiot” or a “mental midget” (I have identified the fact that the members of Congress are idiots, but no one has disagreed with me there). I have never lambasted a reader for simply disagreeing with me.

I do know of at least one tax blogger who does.

“Nuff said!


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