Posts Tagged ‘bad tax advisors’


Bob Marley reminds us that “Everything is going to be all right.” “Don’t worry about a thing.” 

If you like, listen to THREE LITTLE BIRDS as you read this blog post.

As I prepare for my 25th year (a whole quarter century) of tax preparation and consulting, it is easy to look back and see that not much has changed over the years. You can pretty much deduct the same items on Schedule A as you could in 1988 when I started. And, tax freedom day is and remains sometime in May each year for most higher income tax clients of our firm.

Flat tax proposals… well, they fell flat to date and most likely the flat tax talk you hear right now is just a ploy to try to get nominated or elected. I do agree, simplification would be nice. But, so would a private firm in charge of collecting taxes away from the slothfulness we find in a government-owned and run operation. 

ersPerhaps letting a company like Fed EX or UPS run the I.R.S. (changing of course the acronym to E.R.S. – External Revenue Service).  In fact, we are used to seeing a brown truck roll up to our home. An E.R.S. version would roll up and collect your weekly “tax” money and give the employers a break!

Far fetched or crazy?  Yes, it is. But, so is the current system. However, changing it drastically would spell disaster in this country. Especially if charitable donations were no longer deductible. All those good, well-heeled clients I see that give a lot of both money and goods (used stuff) to charities keep this country going and helps so much the people who depend on agencies, churches and other non-profit companies for welfare to help them “exist” during these tough times.

Of course, charitable education gifts including help with college costs is another massive charitable effort that must not be hampered by overly aggressive legislators trying to put additional feathers in their caps!

All I’m saying is let a private “for profit” firm run the I.R…I mean E.R.S. – and efficiency would improve. And with efficiency, we could get down to simplification.

But, this blog entry isn’t meant to talk about actual taxes you pay or don’t pay, how well the IRS is run, etc.  It is meant to talk about how satisfied you are now with your current method of tax preparation?

Just in time for tax season this year, Market Tools Blog conducted a new survey in the United States that gauged satisfaction levels among individuals who filed their 2010 federal income taxes as of April 1st, 2011.

The main question only dealt with satisfaction of HOW the survey participants  were with the experience. The highest percent of the filers used an unpaid individual preparer (friend or family member) and 77% reported being “extremely satisfied”.  Now, I want to discuss that just a little.

This first survey result says if you want to be happiest, you’re going to have to take your shoe box of expense receipts and income slips to your Uncle “Bob” or your buddies you snow ski with and force them to learn everything they can on taxes, so you  can be the happiest! (Tongue in cheek here)

Well, don’t despair if you don’t have a relative or friend who is super sharp on taxes and likes to work for free. (My kids are so lucky I do their returns for a penny each year!) The next category down for “Satisfaction” level will cost you a tax preparation fee, but you will be almost as happy as you would be in this first category. Few are lucky to have someone “slave” over their tax situation this year for free, and remarkably –be able to get it right. After all, you don’t want the I.R.S. audit boys showing up at your door in a couple of years to “enforce” wrongful deductions ol’ Uncle Bob shouldn’t have taken!

According to the survey, you only drop 2% in your satisfaction level by MD_Anderson_Looks_For_Every_Deductionusing someone like me. Professionals like me will scour over your tax papers to find every legitimate deduction and come up with a  strategy for the future, so you can pay less tax and keep more of your own hard-earned money. The survey reports that 75% of filers who worked with a paid individual preparer such as an accountant or CPA were “extremely satisfied” with the experience. I guess giving up the tax preparation fee to the professional tax preparer is mostly offset again by knowing that the return was done right and the filer was treated with respect. (not waiting in a crowded office with sweaty people all around you, eating smelly fast food burgers and fries)

Next up in satisfaction levels, was the DIY’s out there in tax land. You are younger and just doing your returns by yourself online or by downloading free (or cheap) software to get the deed done each year. This means (I hope) you have a good handle on tax law and rules – not just a good handle on how to run a computer. If this describes you, congrats!  However, DIY mistakes are becoming legendary.

Take for example, using a scroll mouse. You can be entering W-2 info and sneeze and if you don’t go back and look, your scroll mouse might have entered a wrong code. You might sneeze and tell the I.R.S. you are “dead” now. Worse, you could make a number mistake that could enter you into the system (we only know that DIY mistakes in multiple tax years could get you audited), and the I.R.S. might just pull your file for a closer look later. Two years later is the norm, enough time to be sure  that the penalty and interest on wrongful refunds earns a good rate of return for the government! 

A_Bad_DIY_Tax_DayBut, that isn’t the main reason to consider letting a paid tax professional prepare your 2011 tax returns. The main reason may be the actual survey results!  DIY’s using tax software were just 69% “extremely satisfied” followed by DIY’s preparing their returns online, who reported an even lower 66% satisfaction rate. Maybe, that “doubt’ feeling a DIY has doing their own taxes is the reason. They just don’t know for sure if they can trust themselves, the software they used, or the “guided” instructions that tried to tell them how to do it. And, like any do-it-yourself project you may attempt, something can always go wrong! 

The lowest level in the survey respondents was from those poor souls who visited a tax preparation chain last year to get their 2010 taxes prepared. Only 64% reported being “extremely satisfied” with their experience. And, had full disclosure handouts been provided to them at the door to read before they started, I don’t think that percentage would be anywhere near that high.

For example, H&R Block, obviously the largest tax preparation chain, has some skeletons in the closet you won’t be apprised of if you used them last year. Probably, nobody in their tax office told you:

1. Their broker/dealer (H&R Block Financial Advisors, Inc.) was charged with bond fraud by the N.A.S.D. (now FINRA) over their sales of Enron Corporation bonds just weeks before the company did the Humpty Dumpty. Some of the brokers had claimed they were “safe” right up until the end.

2. The N.A.S.D. also fined them $500,000 for enabling a hedge fund customer  to use deception in market timing of mutual funds. Multiple employees of the firm were involved in the scheme.

3. They announced in August 2005 that they had overstated their earnings for 2003 and 2004 by $91.1 million dollars. They claimed “insufficient resources” to identify and report complex transactions in its corporate tax accounting.

4. In 2006, they admitted in a quarterly result, that they miscalculated their 2005 and 2004 state income taxes, stating they owed $32 million in back taxes. (Their stock price immediately fell 8.5% in one day over that goof!)

5. California sued them in 2006 over their refund anticipation business. The suit by the California Attorney General claimed that H&R Block(head?) charged annualized rates on RAL’s exceeding 500%, after including their fees! The AG said the company falsely portrays the nature of the loans, advertising “cash, cold, green, in your hand, out the door.”

6. New York sued them in 2006 in connection with the sales of the H&R Block Express IRA. The allegations by then AG, Eliot Spitzer (I know, he had a bad habit or too of his own) stated in the allegations that the IRA product earned less interest than the fees paid by the customers to obtain one! The complaint accused them of fraudulent business practices, deceptive acts and practices, fraud and breach of fiduciary duty.

Want more? Well, when they entered the mortgage business, you can only imagine how that one turned out. Just read the 2009 annual report. Pay special attention to pages 12-15, listing the “problems” the company board faced by the time the annual report issued in 2010. Without embellishing the “truth” of the kind of characters that run H&R Block companies – IT WILL BEND YOUR EAR!!!

Even their chairman, Richard Breeden had enough and stepped down last April 18th…

Though the fancy commercials running on television right now would have you think they are the best choice this year – one must seriously stop and ask this question: DO I WANT TO ASSOCIATE WITH A COMPANY LIKE THIS? If you want a higher level of satisfaction, I suggest you don’t…even if you were to use their “Premium” office accountants that are supposed to be the cream of the crop. One visit to THIS SITE may kill that idea!

The second largest chain, Jackson Hewitt would have been treating the customers with more respect last year if they had disclosed the following facts by April 1, 2011:                                                             

We are heading for bankruptcy. (filed 5/24/11)  Though we can tell you how to get the biggest refund – we can’t run our own business on the current business model and went broke! And, we also want to tell you that we will be pushing refund anticipation loans on you again this year, in spite of the fact that we face a class action lawsuit claiming we “bilked” consumers with short-term, high-interest refund anticipation loans. ($1.1 million was later set aside to settle the claims)

And, fresh out of bankruptcy and in 2800 Wal-Mart’s for the 2012 season, one would hope that Jackson Hewitt would tone down the marketing of “big refunds” and “big loans”.  That isn’t happening at all. According to Reuters last December, the last bank (Republic Bancorp) that will still do business with them to fund the loans is backing them one last time this season. It is their last year allowed since they agreed with the Federal Deposit Insurance Corp to stop funding them by 2013. Believe it or not, that was agreed to in order to settle a lawsuit filed against the bank also by the F.D.I.C.

Do you want all your personal identification information left with people like this?

Again, though the fancy commercials running on television right now would have you think they are the best choice this year – one must seriously stop and ask this question: DO I WANT TO ASSOCIATE WITH A COMPANY LIKE THIS? If you want a higher level of satisfaction, I suggest you don’t…

The third largest tax preparation chain, Liberty Tax Service, is a spin-off of Jackson Hewitt. Being fairly new, they haven’t had a chance to get in as much trouble as the two BIG DOGS! And to be fair, west coast reviews I read are favorable so far.

READ MORE ABOUT THE TOP THREE TAX PREP CHAINS — HERE

The final survey results reported that about 1/2 of you reading this (and are employed) are unhappy with your job and thinking of looking around. Yet, the survey also reported that only about a quarter of employers have any system in place to gauge employee satisfaction levels and hopefully, improve them so they don’t go through bodies needlessly.

Lastly, I would like to say that for the last 24 years, I have had to compete with the big dogs. But, when clients leave them and come to me, they become loyal, long-term clients. My online testimonials show I know how to stay out of trouble, do a good job for the client year after year, and grow old with my tax clients! I’m 99% satisfied with the broad income tax clientele I have maintained all these years. And, I would bet my loyal clients would rate their level of “extreme satisfaction” higher than any of these survey results.

We are taking new Arizona as well as national clients this year to grow our practice. We need you to take a step in faith to experience a REAL TAX MAN who will never forget who he serves.

It’s tax time, but don’t

worry about a thing.*

Just call me at:

1-800-782-2806

if you have any questions or would like immediate tax service.

(Such as to get those W-2’s or 1099’s out the door before the deadline)

M.D. Anderson, Accountant, AZCLDP

* Unless you are going back to those “Big Dog” chains who will never tell you how much trouble they get into. Or where you may be heading by using their services. (SEE BELOW)

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