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Thursday, August 16, 2018

NICE WORK IF YOU CAN GET IT



Over at the website ACCOUNTING TODAY Jeff Stimpson recently asked the question “Is this a good time to get into tax prep?

The recently passed GOP Tax Act – aka “The Tax Cut and Jobs Act” – has drastically changed the US Tax Code, effecting every single tax return that will be filed for 2018 through 2025.  Historically, any change to tax law has been good for the tax preparation business.  The Tax Reform Act of 1986, the last major overhaul of the Tax Code, was nicknamed “The Accountant’s Full Employment Act”.

Jeff explains.

Even before reform, many Americans admitted befuddlement over the tax system: more than seven out of 10 called the U.S. system complex in a recent survey from The James Madison Institute. A quarter of respondents didn’t even know if they took the standard or itemized deduction, and only a third expected reform would produce a simpler Tax Code.”

The introduction of DIY tax preparation software and online filing websites has certainly hurt the tax preparation industry.  However, as I am constantly saying - No software package, or online filing service, is a substitute for knowledge of the Tax Code, and no tax software package, or online filing service, is a substitute for a competent, experienced tax professional.

As with any software program the rule is "garbage in - garbage out". If you don't know how to enter the information, or what information to enter, you will not get the best, or even the correct, answer.  A fellow tax professional and tax blogger correctly observed, “Just because there is a computer program or app that will help you complete a task doesn't release you from making sure you understand the choices you make with that program.”

And when the IRS comes after you for errors on your tax return you can’t blame it on the software. The US Tax Court has on two separate occasions rejected the "Turbo-Tax Defense" when a taxpayer attempted to blame tax preparation software for a negligent tax return.

While the GOP Tax Act does to a degree simplify the 1040 for many filers, I have also been saying for years that a much simpler tax system would not hurt my business. I sincerely believe that if we did nothing but 1040As all day during the tax season, we would make more money, experience less agita, and substantially reduce the number of extensions needed.  Most of my clients would not decide to do their own returns if the tax system was simpler; they would continue to come to me.  Most of my clients just don’t want to be bothered with the task of preparing their tax return, and want to make sure they do not miss anything.


Finally - the shameless self-promotion.  If you are thinking of becoming a tax professional I suggest you read my book “So You Want To Be A Tax Preparer”.  For a discussion of this book read “My Review of Robert Flach's New Book So You Want to Be a Tax Preparer” by Andy Frye of the Pronto Tax School.

TTFN

















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