The battles continue in the tax blogging world. After a lengthy and thorough debate on tax preparer regulation (tax pros are good at thorough), we jump into the debate of how best to avoid (or at least not invite) an IRS audit.
First, I must say it's great to have experts talk openly about what will and will not get the attention of the IRS. I am much newer to the profession than the tax bloggers, so I value the information they share about "the real world." After all, the IRS isn't going to teach me about the realities of enforcement. During a recent radio show, an IRS representative told a caller that he should, in fact, amend his tax return because he received a 1099 that increase his tax by $40. Hmm... thanks IRS, but I think I'll read what the bloggers have to say.
So Peter Pappas began the debate (perhaps inadvertently) with his post titled 5 Slam Dunk IRS Audit Red Flags. Robert Flach posted a commentary, and the debate ensued.
As usual, I agree with both of them on several issues. And I think they too agree on several key points. The IRS is more likely to scrutinize returns with these five deductions, simply because returns with these deductions are more likely to have error or fraud. It's about probability, and don't we tax preparers love math?
I did not anticipate the change in the debate's focus, which became that of whether a return prepared by a CPA is less likely to have errors than a return prepared by a non-CPA.
Robert is correct that a CPA is not specifically licensed for tax preparation, rather "a CPA is a licensed accountant, authorized to certify audits of financial statements." Just a couple of months ago, I was pondering this exact issue. I was thinking about all the fancy credentials the AICPA offers for CPAs in other specialties - financial planning, fraud examination, business valuation - and wondering how to become a certified tax expert.
So I emailed the AICPA asking about it. Here's the exact wording of the response I received:
"We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to 'own'. In addition, we do not endorse a particular tax credential."
And so we CPAs specializing in tax find ourselves in a bit of a quandary. Our CPA designation does not by itself qualify us as tax experts, but there is not another designation available that does.
And now we arrive back at our original issue of debate, that of tax preparer regulation. Is anyone else getting dizzy?
First, I must say it's great to have experts talk openly about what will and will not get the attention of the IRS. I am much newer to the profession than the tax bloggers, so I value the information they share about "the real world." After all, the IRS isn't going to teach me about the realities of enforcement. During a recent radio show, an IRS representative told a caller that he should, in fact, amend his tax return because he received a 1099 that increase his tax by $40. Hmm... thanks IRS, but I think I'll read what the bloggers have to say.
So Peter Pappas began the debate (perhaps inadvertently) with his post titled 5 Slam Dunk IRS Audit Red Flags. Robert Flach posted a commentary, and the debate ensued.
As usual, I agree with both of them on several issues. And I think they too agree on several key points. The IRS is more likely to scrutinize returns with these five deductions, simply because returns with these deductions are more likely to have error or fraud. It's about probability, and don't we tax preparers love math?
I did not anticipate the change in the debate's focus, which became that of whether a return prepared by a CPA is less likely to have errors than a return prepared by a non-CPA.
Robert is correct that a CPA is not specifically licensed for tax preparation, rather "a CPA is a licensed accountant, authorized to certify audits of financial statements." Just a couple of months ago, I was pondering this exact issue. I was thinking about all the fancy credentials the AICPA offers for CPAs in other specialties - financial planning, fraud examination, business valuation - and wondering how to become a certified tax expert.
So I emailed the AICPA asking about it. Here's the exact wording of the response I received:
"We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to 'own'. In addition, we do not endorse a particular tax credential."
And so we CPAs specializing in tax find ourselves in a bit of a quandary. Our CPA designation does not by itself qualify us as tax experts, but there is not another designation available that does.
And now we arrive back at our original issue of debate, that of tax preparer regulation. Is anyone else getting dizzy?