This week I participated in an Internal Revenue Service survey. The IRS has been conducting these random surveys for several years now in the professional tax preparer community. I was asked a few ‘Qualifying Questions’ and apparently passed.
The first segment of questions concerned the volume of tax returns I prepared as well as the type and what percentage of those returns are e-filed. I was then asked about responding to notices clients receive from the IRS. One questioned posed was, ‘Who is to blame for notices concerning non-payment or late payment of tax, the IRS or the taxpayer? Without analysis I went with my gut and blamed the IRS. It probably isn’t accurate, but it is always more fun to blame the government.
To expound a little on taxpayer notices that are received in the mail, oftentimes those are generated by a computer because of a technical match (or mismatch). What I see with more frequency is brokerage firms submitting 1099s for interest, dividends or stock transactions with incorrect information. Certainly that isn’t the IRS’ fault for generating an official notice but it’s hardly the taxpayer’s either.
I do have an anecdote about incorrect notices being issued. This past summer a client received a notice and I immediately called the IRS to get additional information. The IRS’ response was ‘We haven’t actually processed the documents this notice regards. Sometimes those notices are automatically generated before we investigate the corresponding return.’ That one would probably be the IRS’ fault.
The final line of questioning was in regards to accuracy and ethics of paid preparers. The question that sticks out most in my mind was, ‘what percentage of paid preparers would you say knowingly prepare incorrect returns to reduce a client’s tax liability?’ I made the comment that I felt there were some shysters in my town before I gave a percentage. I finally said 50%. I may be low.
In future posts I hope to compile a list of the craziest things I have personally seen professionals do to reduce a taxpayer’s tax liability.
The first segment of questions concerned the volume of tax returns I prepared as well as the type and what percentage of those returns are e-filed. I was then asked about responding to notices clients receive from the IRS. One questioned posed was, ‘Who is to blame for notices concerning non-payment or late payment of tax, the IRS or the taxpayer? Without analysis I went with my gut and blamed the IRS. It probably isn’t accurate, but it is always more fun to blame the government.
To expound a little on taxpayer notices that are received in the mail, oftentimes those are generated by a computer because of a technical match (or mismatch). What I see with more frequency is brokerage firms submitting 1099s for interest, dividends or stock transactions with incorrect information. Certainly that isn’t the IRS’ fault for generating an official notice but it’s hardly the taxpayer’s either.
I do have an anecdote about incorrect notices being issued. This past summer a client received a notice and I immediately called the IRS to get additional information. The IRS’ response was ‘We haven’t actually processed the documents this notice regards. Sometimes those notices are automatically generated before we investigate the corresponding return.’ That one would probably be the IRS’ fault.
The final line of questioning was in regards to accuracy and ethics of paid preparers. The question that sticks out most in my mind was, ‘what percentage of paid preparers would you say knowingly prepare incorrect returns to reduce a client’s tax liability?’ I made the comment that I felt there were some shysters in my town before I gave a percentage. I finally said 50%. I may be low.
In future posts I hope to compile a list of the craziest things I have personally seen professionals do to reduce a taxpayer’s tax liability.
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