And not all tax people are interchangeable.
This is my Dad’s car. Imagine that this car is having an, as yet unidentified, engine problem. Here’s a short list of items that make this car special:
- It’s old
- It’s foreign (specifically German as opposed to Japanese)
- It’s considered a “performance” or “sports” car
- It was manufactured for sale in 1970s California (in other words, specialized emissions equipment)
My dad lives in a town with maybe one professional mechanic and a lot of hobby mechanics. Many of the hobby mechanics are pretty good mechanics, at least when it comes to cars they know. Many of the hobby mechanics have access to the internet and are willing to do their research and ask other mechanics questions. So, what’s the best option here? Put this classic car into the hands of a hobby mechanic? Take it to the local pro who works mostly on Fords and Toyotas? Or actually get it on a trailer and take it to someone who is a recognized specialist in this type of car? Maybe someone who was trained by someone who was a mechanic in California in the 1970s and who now specializes in vintage German cars? I guess it depends on how much you value your money, your time, and your car.
What does this have to do with taxes you ask? Well, I’m seeing a lot of hobby mechanics holding themselves out as professional mechanics and working on cars they have no business working on. Cars they can really damage but the owner won’t know it for the first several thousand miles. I’m seeing brand new tax professionals asking questions on Facebook about changing entity selections, about foreign tax issues, about complex individual and business tax planning when they are simultaneously asking questions that make it clear they don’t understand the difference between federal income tax withholding and FICA withholding. It’s as a friend of mine put it “horrifying.”
Even professional mechanics don’t know everything about every car. It is the same with #taxpros. Those who specialize are great at what they do but may only have a basic knowledge of other areas that also may require specialization. Understand that when you are shopping for a professional to prepare your return you may be getting a hobby mechanic instead of a professional mechanic. You may be getting a professional mechanic (#taxpro) who specializes in Ford F-150s instead of vintage, foreign, diesel engines and your car (tax return) is a 1971 Peugeot diesel. Maybe the mechanic can work on your car but should the mechanic work on your car or refer you to the specialist across town? One hopes an ethical mechanic will either decide the problem is only slightly outside their scope of competence and they have resources (other mechanics and the internet) with whom they can consult or send you on down the road. But what if they don’t? What if by the time you find out that your engine is damaged (that you’ve received the first IRS notice) you are already looking at sinking quite a bit of time and money into undoing the damage? What if indeed.
If you wouldn’t turn your car over to a hobby mechanic, why are you shopping for a #taxpro based on price, fast turnaround, and/or location?
When it comes to hiring someone to “do your taxes” choose wisely. The consequences of failure can be high (and expensive).
Read more about How to Choose a Tax Professional here.