Monday, June 24, 2013


Any tax preparer – regardless of training, experience, or “initials” – can make a mistake.  I know I have made mistakes on 1040s I have prepared over the years.

The mistake can be mathematic or involve the proper application of tax law or regulation.

A tax preparer can unintentionally omit reporting or entering income or deductions from an information return or a client worksheet. 

A tax preparer can unknowingly understate or overstate taxable income or legitimate deductions.  A tax return is prepared based on information supplied by the taxpayer, and this information can be, purposefully or not, faulty.

Over the years I have found that tax preparers who use tax preparation software – which I expect is now about 95% of all tax pros (I am truly one of the last of the dinosaurs) – tend to become lazy when it comes to checking software-generated tax returns.

There is nothing to guarantee that a tax return generated using a tax preparation software package, whether or not the “preparer” is a tax pro or the taxpayer himself/herself, is correct, mathematically or otherwise.  All software-generated tax returns should be double and triple checked. 

Using a tax preparation software package is no substitute for knowledge of tax law.  This applies to paid preparers as well as individual taxpayers.  I sometimes wonder how many alleged tax professionals, especially those employed by the “fast food” tax preparation chains, are really nothing more than data entry clerks. 

And, of course, a tax preparer - regardless of “initials” or having to sit through 2 hours of ethics preaching annually - can purposefully file a fraudulent return, with or without the knowledge and consent of the taxpayer.  Holding a professional credential or attending annual ethics CPE is no guarantee that a tax preparer is honest or ethical.

Before signing and filing any tax returns prepared by a tax pro review the return carefully.  If the return was software-generated ask the preparer if he/she has checked and verified the math on the returns.  If there is anything on your returns that you do not fully understand have your preparer explain it to your satisfaction.

Just because you do not understand something on your return does not mean that anything is wrong.  Do not automatically assume that your preparer has made an error.  Whatever you do, do not call or email your preparer and say “you made a mistake on my return”.  Simply tell him/her that you have a question about something on the return.   

It is important to remember that you, the taxpayer, are ultimately responsible for everything that is on your tax return.



NMCPA said...

Thanks for the great post. I always enjoy reading your articles. You cover such a great range of topics. As professionals, we have to remember that people rely on us to be accurate and perform our best. However, it's also important that tax payers understand their own responsibilities.

KH said...

From what I see on the photo you have on you blog, I think my great-uncle could still one-up you, Mr. Flach. Back in the '70s he used to do my Dad's taxes COMPLETELY by hand - without even a calculator or adding machine, using pencil and paper for the math. (Raises the question: do you double-check your calculator's math?) And the return was for a dairy farm, not just a simple W2.

The man still does farm returns without software, although he's probably in his 80s. I don't know if he uses a calculator today or not.