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How to choose a tax accountant?
I was reminded, yet again last week, of the importance of consumers being aware of what they are buying. I have been in the accounting profession for over 30 years and have seen many financial problems over those years. But each tax season, several new clients come to see me who have had their tax return prepared by a "friend" or someone who prepares tax returns "on the side" as a supplement to their real job. Usually, by the time I am introduced, it is because they have a problem - often a tax audit. My new clients don't know why they were selected. But often I do. Sometimes it is because of obvious excessive losses on "hobby business" or unusual expenses in areas which when the return was filed with the tax department, the tax payer might as well be saying "Come and get me."
As many years as I have been in practice, I wished I could say that times have changed, but it is still the same old story. The sad thing is that in almost all cases the cheap deal someone received by getting their tax return prepared by a friend or an inexperienced person costs them more than they ever imagined in taxes, back interest or just the stress of going through a tax audit. Often cash refunds that they might have received on the original filing have been spent and then two or three years later they are facing a tax audit and potentially repayment of taxes and interest.
Many of my associates have agreed that there is a lot to be said for licensing the tax service, not unlike the legal profession. Unfortunately there is no legal licenses required for preparation of tax returns, financial consulting and financial planning. It is strictly buyer beware. In the case of some buyers, not enough effort is made to make sure that the person they trust with their financial future is not only a "great guy" but is professional equipped to hand either preparing their tax returns or giving them financial advice.
It is difficult to judge a book by its cover, and consumers must use good judgement in selecting their financial advisors. One good piece of advice when selecting a tax consultant or financial planner is to look for someone who has obtained a professional designation. This will give you some assurance that the person you are dealing with has not only received technical training in the field that they are specializing in, but is required to take educational upgrades that are mandatory by almost all associations. Even with this precaution, it is still very difficult for the consumer to judge the expertise of an accountant or professional financial advisor.
Even though friends or acquaintances may have given you a referral it is up to you to be the skeptic. Don't be afraid to ask questions about the person's ability and years of experience before you engage a financial advisor. Question what educational qualifications they have, and how often they are being upgraded. If advice given to you sounds too good to be true or just doesn't sit well, ask questions, or get a second opinion. Remember it is ultimately your taxes and your financial future that is being affected.
Joyce Smith is president of JA Smith & Associates Inc. Certified General Accountants and Certified Financial Planners. The firm offers financial and tax planning advice for both individuals and business.
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