January 2013

Competing to Prepare Your Tax

There are approximately 720,000 tax preparers who are competing to prepare your tax  return for a fee.  A breakdown of these preparers is as follows:  (Approximate)

Certified Public Accountants (About 40% of CPA’s prepare tax returns, while others do Audits, SEC filings and Sarbanes Oxley Compliance and various financial consulting services.)  CPA’s = 212,000 approx   They are for the most part; competent tax preparers.

Enrolled Agents   = 43,000 approx 

They are for the most part; competent tax preparers.

Attorneys              = 31,000  approx 

They are for the most part; competent tax preparers.

Others                   = 434,000  approx  

Unlicensed or provisional preparers who for the most part are not qualified to do tax returns.  The IRS has required all unlicensed provisional tax preparers take 15 hours of continuing professional education for 2012 and 2013 and to pass a basic proficiency exam before Dec. 31, 2013. As of August 31, 2012, less than 4,000 of the provisional preparers have passed the IRS examination.

Certified public accountants are required to take a minimum of 24 hours of continuing education and VB&T requires all staff members preparing tax returns take a minimum of 40 hours of CPE’s annually.

At the end of August, the IRS held their “Annual IRS Nationwide Tax Forum” at the NY Hilton in NYC.  This forum provides current tax updates and relevant hot tax topics and is most informative for experienced tax preparers.  The Forum also carries 21 continuing education tax credits.  The last forum was especially crowded since the unlicensed provisional tax preparers could attend and get their 15 hours of CPE’s.

As the various topics were discussed, it became very obvious to me that most of the people attending the “Forum” had no concept of taxation or tax laws and did not have the proficiency to prepare even the simplest of tax returns. These unlicensed preparers relied on their software to prepare tax returns, while the CPA’s, Enrolled agents and Attorneys relied on their experience and knowledge and used the software as a tool rather than the an easy way to do a tax return.