Loading...

Trust, But Verify: Taxation and Reputation

Every year at tax time, we trust our tax preparers with information we wouldn’t share with just anyone. Whether we fill out a Form 1040 individual tax return, a Form 1065 for Partnership Income, or any of the other common Internal Revenue Service forms, we turn to professional tax preparers and give them access to sensitive financial records.

For the most part, that trust is well placed. But nobody likes to pay taxes, so there tend to be a lot of unhappy customers after April 15th. Unhappy customers write online reviews, and negative online reviews can hurt the reputation of your business. If your business is preparing tax returns, it’s essential that you stay on top of the reviews.

No Easy Answer

Tax preparers do their best to identify every deduction their clients are legally entitled to. It isn’t always easy: every preparer has a horror story about the client who emptied a bag of unorganized receipts on the desk, expecting the preparer to sort them all out.

“No day is ever the same,” one tax preparer observed. “Each client is unique in their own special way. Every return is a puzzle, and has no easy answer.”

Organized or not, it’s up to the tax preparer to make sure the returns he or she prepares are as accurate as possible. With their professional reputations on the line, most do an excellent job. But at the end of the day, taxpayers bear responsibility for the claims they file.

“Ultimately, it’s the taxpayer, not the tax preparer, who is on the hook,” said former IRS Commissioner Doug Shulman. If something goes wrong, it’s the taxpayer who is left holding the bag.

Choose Wisely

John Breyault, of the National Consumers League, concurred. ““No matter who prepares your taxes for you, it’s the taxpayer who is ultimately responsible for what is on the return.” And he took it a step further: it remains the taxpayer responsibility whether they've used a high-priced firm, or have been ripped off by a fraud.

There are things that everyone should do when looking for a tax preparer. Kelly Phillips Erb, a lawyer and tax authority who bills herself as Taxgirl, says that when you’re in the market for a tax preparer, the most important thing to find out is whether they have a valid Preparer Tax Identification Number, or PTIN.

“This should be your first question,” she wrote in Forbes. “Anyone who prepares federal tax returns for compensation must have [an up-to-date] PTIN before preparing returns.” Information about obtaining a PTIN is on the IRS Website.

She also recommends asking whether your would-be tax preparer has prepared your type of return before. There are many types of returns, and tax preparers may be most familiar with the common types, like the Form 1040.

The Internal Revenue Service has more suggestions for choosing tax preparers on its website.

Control the Conversation

“In [most] states,” intones the National Consumer Law Center, “there are more regulatory requirements for hairdressers than tax preparers. Yet the impact of a bad haircut is far less damaging than an inaccurate tax return.”

The take-away? Buyer beware.

The vast majority of professional tax preparers are honest and hard-working individuals. But they’re human, too, and mistakes happen. Unhappy customers may become vindictive, and turn to Yelp, Glassdoor, or other social media sites in an attempt to damage the reputations of their tax preparers.

That can cause serious harm, because a good reputation is essential to the success of any business. Up to ninety percent of consumers read online reviews, and trust them even more than they do personal recommendations. But by properly managing the reviews of your business, you can control the conversation and protect your reputation.