J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

Based on your own personal experiences or the experiences of those whom you know, everyone who is reading this article will have a different opinion on its importance and relevance.  I would like to stipulate that its importance is much higher today than it was three to five years ago but not as high as it will be three to five years from now.  There are several key factors which support this statement:

1. The budget deficit for our Nation is at a record high level, at an amount so large that is historically unprecedented;
2. To partially drive down this deficit to levels considered acceptable by the electorate, there is an urgent need for tax revenues, the greatest majority of which are provided by individual taxpayers;
3. Advances in technology are providing the taxing authorities with greater opportunities to identify and collect  this revenue;
4. The complexity of the existing tax laws has tended to increase over time which has simultaneously increased the challenges for all taxpayers in understanding the myriad of tax laws, interpreting them correctly, and filing accurate income tax returns;
5. Not only are the current accuracy standards for taxpayers and tax return preparers at an all-time high, but they are expected to continue to increase throughout the foreseeable future.

Presently, you have two options: 1) prepare all of your tax returns yourself, or 2) engage the professional services of someone else to prepare your tax returns for you.  This is an extremely important decision.  Regardless of your decision, you remain legally and financially responsible for all of your tax return information and data.  In January 2011 I published two closely related articles on this subject at this website:

• “Should I Continue To Use Tax Software or Should I Contact A CPA???? (http://www.billseabrookecpa.com/blog/?p=507) and
• “Important Tax Preparer Considerations”  (http://www.billseabrookecpa.com/blog/?p=454)

Clicking on the above hyperlinks will permit you to access either or both articles.  There is additional, relevant information for you in this article today.  However naive it may have been at the time, as a very young CPA I assumed (??) that all, or even most,  CPAs within my profession continuously strive to achieve, maintain, and uphold the highest standards for their integrity, technical knowledge, client communications, and client satisfaction.  My own actual experiences have demonstrated to me that this assumption is not always correct.  If you choose to engage the services of either a tax preparer, CPA, or tax attorney, I am recommending that you consider all of the information in all of these articles in your decision-making process, and that you continuously evaluate your tax professional throughout every aspect of your tax engagement.  If there is ever an instance of dissatisfaction, immediately inform the tax professional, or obtain the services of another tax practitioner.

Additional “qualitative factors” which you should use in making your decision, include, but are not limited to:

1. Open Cummunications -  are you always accorded dignity and respect by your tax professional? Is there continuous dialogue between both of you?  Are you always kept abreast of the important aspects of your tax returns and tax situation, including the key provisions of pending and new tax laws?  Does your tax professional communicate with you in terms and concepts which you easily understand and for which you can subsequently conclude yourself is the best or most appropriate response?  Does your tax professional continuously discuss with you opportunities to reduce your tax liability?  Does she or he explain opportunities for you to benefit from existing or anticipated changes in the tax laws?
2. Responsiveness –   does your tax professional always promptly respond to your inquiries, questions, and concerns especially correspondence which you receive from any taxing authority?
3. Accessibility – is your tax professional always reasonably accessible to you following a telephone call, e-mail, written correspondence, etc?
4. Engagement Letter – does your tax professional provide you with a document, which is easily understandable by both of you, which sets forth all of yours and his or her responsibilities, including important provisions, tasks, dates, deadlines, fees and costs, etc?  Is it signed and dated by all parties?
5. Documentation –  does your tax professional respond to all of your questions regarding the data and information in your tax returns with an explanation of all supporting statements and schedules, if needed by you?  Are you provided with a complete hard or soft “as filed” copy of your tax returns for your records?  Are ALL of your original tax records returned to you?  If you are a business owner, does your tax professional provide you with an explanation between the amount in your financial statements (Balance Sheet, Profit and Loss, General Ledger etc) and the data submitted in your tax return?  Does the tax professional provide you with all of the required accounting adjusting entries that are required for your business?  Is the fee for his or her services appropriate under the circumstances and acceptable to you, including the fee payment schedule?
6. Warranty – your tax preparer or tax professional should always stand behind (warrant) the accuracy and completeness of the tax returns which he or she prepares for you.  If the taxing authorities subsequently determine that there are errors or defects, unless it is due to misttatements of fact on your part, there should not be any additional costs to you for the preparation and filing of amended tax returns.  If there is a stipulation to the contrary, it should be clearly set forth and stated in the “Engagement Letter” which is described above.

There is addtional information on this subject from the Internal Revenue Service:  (more…)