It’s time to think taxes. W-2s and other forms are getting mailed and the airwaves are full of advertising for tax preparers and tax software. So I’d like to offer a bit of advice for those who are planning on letting someone else prepare their taxes. Think about conflict of interest.
All tax professionals have their own priorities when dealing with clients.
As an independent tax pro, I work for me. I provide services such as tax return preparation and audit assistance for clients. I’m not their employee. I limit what I do for clients based on my skills and my need to stay in business. Fudging expenses or not doing proper EIC due diligence may help the client get a bigger refund and get me a few more dollars now but it opens me up to all kinds of fines and possible loss of livelihood down the line. It’s not worth it to me. If I have a conflict with a client, following the law is better for me even if I lose the client. But as long as it’s legal, my priority it to prepare a correct return based on the info the client provides which results in the least legal tax.
Where taxpayers need to be very careful is with tax preparers where the preparation of a correct tax return seems to be part of another priority. There are a lot of firms which are more interested in loaning you money or selling you a car than preparing a tax return. But they will prepare a return to bring you in to their business. Their conflict of interest is that they want the refund from the return to help fund them more than they want to make sure they prepare a correct tax return. There are some very reputable preparers working for a car dealership or loan company but the taxpayer needs to check them out to make sure they are getting a correct return over a big refund.
Conflict of interest is to be expected in any business. We all have our priorities. But when someone prepares an incorrect return to maximize the refund, they potentially put their client in conflict with the IRS. That extra $1000 the preparer at the car dealership found the client will have to be paid back with interest and penalties if the IRS catches it. And they are getting better at catching fraud. And since the original preparer cared more for the car they could sell or the extra fees from a loan, they won’t care that their actions hurt the taxpayer.
Bottom line is that the taxpayer is always responsible for what is on the tax return. When looking for a tax pro, a taxpayer needs to visit with them about their priorities, procedures and licensing. Don’t assume they will help you fudge your return. And don’t assume they won’t fudge a return if they will gain. Most tax pros are honest people who follow the law and understand the consequences of their actions. Taxpayers simply need to make sure they are on the same wavelength as the preparer they use.