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Three Scary Tax Secrets You Were Never Told About

Apr 10, 2008
The IRS gives us a deadline and people stress about getting organized and scramble to get their returns done by that date. Tax preparation businesses are busier than the average health club just after New Year's Eve. Families quarrel, papers get shuffled, and people often make decisions that could damage their finances for years to come.

You see, there are hundreds of lines of IRS codes or rules that we all try to maximize to keep as much of our hard earned money in our pockets as possible, and not in the governments. Many people feel better about going to a professional to get their tax returns done, but there are three scary tax secrets (really tax preparation secrets) that you may not have considered while you are scrambling to organize tax forms and searching under your car seats for last year's receipts. Here they are in no particular order:

1. A franchise name doesn't mean better or more accurate services.

About 100 million people, or two-thirds of the taxpaying public, pay for help. Professionals like CPAs or enrolled agents have plenty of clients and almost 20% of the taxpayers go through a big name franchise like H&R Block or Jackson Hewitt to get their refunds.

The problem is that tax preparation advice depends on the person that is preparing your return. So with franchises that actually means thousands of "I took a crash course to earn some money this tax season" employees. Quality control is not the focus of a franchise just production line returns.

The results can cost you more than the return they got you back.

2. "Don't worry about this; I can make miracles happen for you."

Complaints about taxes are one thing, but complaints about tax preparers are becoming even more abundant.

The Council of Better Business Bureaus says tax preparer complaints are up 80% over the last 5 years.
If less than 2% of the returns ever get audited because the IRS is overwhelmed, does that mean that the "miracle worker" just hasn't been caught yet? There seems to be no associations that can police the tax preparation industry.

In fact, an organization for professionals, like The American Institute of Certified Public Accountants are often stuck waiting for the IRS to act. That's when they report accountants to the relevant state authorities and eliminate memberships, after the IRS says something. How many years might they get away with tax fraud on your return if you don't know any better?

3. "Why is some guy in Asia doing My Tax Return?"

The buzz word in business is outsourcing. Tim Ferris recently wrote a book called The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich that champions the idea of outsourcing everything you can. Now the tax preparation industry is starting to outsource tax returns in order to reduce overhead and save time. Here's the scary part, accountants and tax prep companies aren't required to tell you about it either.

Most people aren't even aware that this is an option for their business, so they don't even ask. So think about this, identity theft is growing like a California wildfire in the summer and these companies want to send my name, address, Social Security numbers, birthdays, and possibly bank account numbers to another hemisphere!

I don't know about you but that may be the scariest reality so far.

So, during this tax season, and every one to follow, keep this list around you and ask questions. Don't let the mindset of; "Just get this done for me" destroy your future because of tax time stress and the scary reality of tax preparation companies and accountants.
About the Author
Scott Letourneau is the CEO of NCP,Inc. and an authority in helping people form entities,grow their business,and protect the assets of that business. For more info contact: Scott Letourneau at 702-367-7373 or http://www.nvinc.com
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