For most taxpayers once the balance due is paid or the refund comes in they stop thinking about taxes. This article provides a great explanation about why tax time is the worst time to ask the important questions or to try to find a new taxpro. In general, if the year holds “potentially taxable events” for you (marriage, children, retirement, college, lost job, new job or promotion, buying or selling business property) the time to start planning is now, not January! The same thing goes if you are considering changing from a DIY option to hiring a #taxpro or switching #taxpros.

Most #taxpros spend November and December installing and testing our software and doing refresher classes on tax law changes. Plus, most of us also have lives outside of the office and like to spend at least some of the holiday season with our friends and families! In January those of us who also offer bookkeeping and payroll services are busy doing end of the year close out work and preparing W2s and 1099s. Even those of us who don’t offer bookkeeping and payroll are usually busy getting ready for tax season: updating engagement letters, refining our client interview process, updating office policies and processes, training new staff, etc. By February we are working on returns (returns for partnerships and S-corporations are due on March 15th, not April 15th!). By March, when many taxpayers start to feel the deadline approaching and decide it’s time to “do their taxes” #taxpros are slammed with work. Many of us are not accepting new clients or, if we are accepting we will require you to go on extension. If you call us on or after April 1st looking to come in as a new client 1) we will hate you (we are totally burned out by the end of March), 2) we may laugh at you (but we don’t really think your request is funny), 3) we are going to either insist you go on extension or refer you to a shop (often one of the large franchises) who is set up to handle last minute walk ins. Note: Yes, we do consider two weeks before the filing deadline “last minute.” By April 1st (and, no, we don’t think the tax-related April Fool’s Day pranks are funny either—please don’t call saying you are being audited or levied if you aren’t) we are almost completely focused on getting returns out of our offices, not bringing them in. We are adding last minute documents to mostly completed returns. We are booking review and signature appointments. We are even planning for next filing season. We are rarely actively looking for new business.

The best time to find a #taxpro is actually summer through early fall. We have had a chance to recover from the April 15th deadline push. We may be busy working on returns on extension (especially if it is close to the September 15th deadline for partnerships and S-corps or the October 15th deadline for individual returns) but typically we are less busy than during the first part of the year. We will have time to review your situation thoroughly, answer what questions we can at your initial consultation, research questions for which we don’t have the answers, and we can give you an idea of our office process and what to expect and the documents we will need to complete your returns. It’s much less hectic and, at least in my office, a bit less formal when new clients come in for “onboarding” during the summer. You will also have a much wider range of appointment times available because existing clients for the most part don’t book appointments in the summer unless they are having a “taxable event”. So, whether you are an existing client ready to do some tax planning or a potential client wanting to find out more about the office, the time to call or e-mail is now! Give us a call at 505-352-0058 or send us an e-mail at info@taxtherapy505.com and we will be happy to schedule a consult.

The raging started around the second week of February and it continues online and in the offices of #taxpros around the country right now. Many taxpayers are furious that they are not getting as much back on their income tax refund as they were expecting or worse—they have a balance due! Alas, this was not news to the people at the IRS who had been warning taxpayers via an extensive public information campaign to check their withholding. You see, the Tax Cuts and Jobs Act (TCJA) reduced income tax rates for everyone. But it also eliminated (well, suspended) personal and dependent exemptions and eliminated or capped some types of itemized deductions. And the IRS adjusted withholding tables (how much gets taken out of each paycheck to “put in the bank” towards your federal income tax) to (they thought) more closely align with the taxes that would be owed under the new law. Epic fail.

Epic fail in so many ways.

First, some people are actually paying higher taxes under the new law despite the lower tax rates and wider brackets. If you have a large family, the elimination of dependency exemptions often was not leveled out by the increased standard deduction and child tax credit—especially if your large family includes a couple of older teenagers. The new higher standard deduction doesn’t help much if you used to have itemized deductions that were close to the new amount. Combine the itemized v. standard issue with the suspension of exemptions and many people are getting some nasty surprises. They actually do owe more tax under the new law than they did under the old law. But even for taxpayers who are paying less in taxes, they have smaller refunds or a balance due. Why? Because of those adjusted withholding tables. They were getting more money back in their paychecks for most of the year instead of on their tax refund at the end of the year.

Here’s the thing—the people who made this law (who make all of the tax laws) simply do not, cannot, will not comprehend the day-to-day reality of most taxpayers. Their “conventional wisdom” is about the “time value of money” (yeah, google that stuff). They figure it’s a bad thing to loan your money interest free to the government for the better part of a year instead of having it in your bank account making money for you. The bits they miss are 1) according to the data most Americans don’t have enough money in savings to cover a $400 repair bill, so that extra in the paycheck is going towards necessities or niceties (depending on income, family size, etc.), not into the bank and 2) the interest rates on garden variety savings accounts are so close to zero right now that it really doesn’t matter if that extra withholding is being held by the government or put in a savings account (even in a savings account with upwards of $25K in it). Oh wait! Yes it does matter where that money goes. If the government is holding onto it, the taxpayer doesn’t have easy access to it. Tax withholding and the annual refund is actually an easy (if interest free) savings vehicle for many taxpayers. And one that taxpayers count on each year!

The IRS finally snapped to this and to the fact that the new withholding tables might have been, shall we say “a bit optimistic” about the overall effect of the tax cuts. Hence the public information campaign. Now, having my finger on the pulse of the IRS pretty much year round, I was well aware of this campaign and of the withholding calculator they were encouraging taxpayers to use to do a “paycheck checkup.” Nevertheless, since I have a few clients who were unaware of the most sweeping change to the tax code since 1986, I am not surprised at all that many of my clients and many more taxpayers were completely unaware of this big public information campaign.

Every #taxpro I know (including me) made clients aware of the potential issues during tax season last year and during the summer. I offered (and always have offered) my clients a mid-year withholding checkup where I do a “back of the envelope” calculation based on last year’s information, current year information, and any changes to the big tax picture that may have occurred or are expected to occur before the end of the tax year. Some #taxpros charge for this, others do not. I don’t typically charge for a basic checkup, I will charge for more extensive calculations or tax planning. In any case, non-DIY taxpayers probably had one or more opportunities to address the potential issues with their withholding. Many chose not to, some with unfortunate results.

But what about the DIY people? Well, if they missed the public awareness campaign then they probably got surprised. But what if they were aware and what if they tried to use the withholding calculator? You know what? I tried it. I thought it might be faster and easier than my usual hand calculations. It wasn’t. To use the withholding calculator you practically had to do a half year tax return. You also had to know a lot of tax language (AGI, dependency exemptions, tax credits, itemized v. standard). And here is, again, where the people making the laws and creating these tools have a disconnect with taxpayers. Most taxpayers, even if they do their own returns using commercial software, really don’t understand the process—they only understand the end result: refund or no refund. I have high earning, highly sophisticated taxpayer clients who barely grasp it—not because they are dumb (they most certainly are not) but because there is a lot of specialized language and a lot of moving parts and this is not what they do all the time. If I threw up my hands in frustration trying to use the IRS tool, I can only imagine what a “regular” taxpayer was feeling.

Situations like these are where a good #taxpro adds value. It’s why we cost more than DIY software. We understand the big picture (and often the history) for each client. And we can do calculations by hand faster than you can do them with software and, because of that big picture knowledge, we are often more accurate. I dial my clients into whatever type of refund they want. I have some clients who don’t mind getting big tax bills when they file their returns (they are the clients whose money is making them a lot of money). I have others who like to break even; they want the most take home pay they can manage and don’t mind a small refund or balance due. I have others who want those big refunds. They do use their federal income tax withholding as a no interest savings account. And you know what? That works for them and that’s OK with me!

The bottom line is that a lot of the rage is coming from people who think they are paying higher taxes because their refunds are lower (or not there). Not true. Some rage is coming from people for whom the tax cut actually was not a tax cut. Definitely and depends greatly on individual facts and circumstances. When you hire a #taxpro to “do your taxes” the good ones do more than put numbers in boxes. They help you meet your financial goals and prepare for the effects of tax law changes such as these. So if you decide to “go pro”—choose wisely, choose well.

Today’s post is brought to you by the brainiacs over at the Procedurally Taxing Blog. Specifically, it was this post on a taxpayer winning damages from an employer who both misclassified him as an independent contractor (he got a 1099-MISC instead of a W2) and who reported more on the 1099-MISC than the employee (he was not a contractor) actually got paid. For taxpayers in New Mexico, the federal income tax issues that result from this type of misclassification are often only one part of their problem.

One of the most common issues that brings a DIY taxpayer to my office for representation services is getting an audit notice from the state—for NM State Gross Receipts Tax. Unlike most other states, New Mexico charges gross receipts tax on the sale of goods and services. That’s why NM-GRT is included on my local clients’ invoices. When you are self-employed in New Mexico, you are “in business” in New Mexico with all that implies. Sometimes clients know they are self-employed, but for one reason or another (for example they have come from a state that does not charge gross receipts tax on services) they are unaware of the NM-GRT compliance issue. That’s why it’s usually the first question I ask self-employed potential clients and one of the things I remind current clients who are considering starting “side hustles.”

Unfortunately what also often occurs is that a client’s employer puts that client “into business” in New Mexico by misclassifying an employee worker as an independent contractor  (IC). Sometimes the employer is upfront about this—sort of. Typically the employer tells the worker all the “benefits” of being an IC (deducting certain expenses, etc.) but fails to mention the drawbacks—maintaining income and expense records and mileage logs, self employment taxes (paying into Social Security and Medicare), and here in New Mexico, NM-GRT. The taxpayer thinks they are getting a good deal until they do their own tax return and get audited or get told by their #taxpro that not only do they owe income and self-employment taxes to the IRS, they owe income and gross receipts taxes to the state.

It’s important to remember that “not caught” is not the same as “accurately filed” (or in the case of NM-GRT not filed!). The computer matching used by the state (and the IRS) is only getting more sophisticated. If you aren’t sure about your requirements, it’s best to consult a #taxpro before you get the notice and it’s definitely best to consult one if you get a notice. True #taxpros offer much more than return preparation and audit representation; they manage the process for you and provide peace of mind.

I love living here in the west. We have lots of sayings about “things cowboy” out here:

  • Cowboy (or cowgirl) up.
  • Not my rodeo, not my clowns.
  • Not my cattle, not my (uh) manure.
  • Big hat, no cattle.

And the list goes on. I’ve visited lots of places in this country and all of them have their advantages, but I can’t imagine ever making a home east of the Rockies. I love the wide open spaces and the freedom they inspire. But sometimes what is an advantage in some circumstances (lots of freedom) proves to be a disadvantage in others, which brings me to today’s topic—tax cowboys.

Unlike, say, rancher type cowboys (who in my experience are a pretty conservative group if a bit dismissive of the whole “paperwork thing”), tax cowboys are more like rodeo cowboys. They are risk takers. They see the tax code and form instructions as a personal challenge. As obstacles to be overcome. As an opportunity to show you (the client) what they’re made of. They’re personable. They have swagger. They are really easy to like and even easier to believe because they often tell you what you want to hear. The problem is the risks they are taking are with your taxes and your money, not their own.

Tax cowboys aren’t the same as ghost preparers. They are often highly experienced, well educated #taxpros. They often are not the lowest bidder on price. They will sign your return as a paid preparer. And yes, signing a tax return as a paid preparer comes with its own set of risks. But the thing about tax cowboys is the big risks they are taking are with positions on your tax return and therefore with your money. “Not caught” is not the same as “accurately filed” and relying on the advice of a paid preparer may get you out of some penalties and interest, but it is rarely enough to get you out of owing more tax (sometimes a lot more tax) if your return is ever examined (audited) by the IRS and/or by the state. You sign that return too. By signing it (or authorizing the e-filing) you are stating that you have reviewed the return and agree with what’s on it. That’s why this office always includes time for a review before you sign the e-file authorization form.

Let me repeat “not caught” is not the same as “accurately filed” and tax cowboys are playing with your money and rolling the dice for you. The consequences will be on you. Fixing the issues will be on you. You may think you like the result now, but you won’t like it later and the algorithms that catch these problems are only getting more sophisticated. Be sure you know the big picture and are ready for the whole eight-second ride!

The question is not can you, but should you?

I often answer calls from potential clients (often referrals from existing clients) who have 1099 (independent contractor/self employed) income. Sometimes they call because they “ran into problems with Turbo Tax.” More often it’s someone’s first time getting a 1099 instead of a W2 and s/he doesn’t know what to do. As always with potential clients who are self employed one of my first questions is “Are you aware of New Mexico’s Gross Receipts Tax and your filing requirements?” The answer is usually “No.” My response is a version of the following: “Well, this is separate from income tax and it is important to remain in compliance. I can help you with that too but GRT compliance consulting is a separate engagement from return preparation.” Sometimes after talking with them for a while I realize they may have filing requirements in other states. Being self-employed is not for the faint of heart. I can practically hear the panic on the other end of the line.

Often I am then asked about my charges and I provide the basics and some of the information about how I add value and reference this post as well. I tell the callers to think about it and to call me back if they would like me to send them an organizer (our preliminary paperwork packet). I remind them my job is to make sure that they are in filing compliance and are paying the correct amount of tax (no more, no less). Usually that’s the last time I talk to them. Frankly, I am usually surprised when a caller like this calls back. And that is OK. I would rather know early on that they won’t be a client than have them come on board and then end up arguing with them about the return results and having them refusing to pay for the work. That situation happened a couple of times last year and has resulted in a pre-payment policy for new clients coming in during tax season. These callers may find another #taxpro. Or they may go ahead and do their returns themselves and hope for the best.  I have a colleague who makes probably half of his annual income representing clients before the IRS for mistakes they made because they tried to do their returns themselves. Remember this meme?

It goes hand in hand with my mantra “The rep rates are three times the prep rates.” You may see my prices and think “way too expensive.”  But what I charge for preparing an accurate return is about one-third of my rates for representing clients in front of the IRS or a state taxing authority. My return preparation charges are in line with national and regional averages. Representation, however, is pretty much “lawyer work” and my rates are similar to what a lawyer will charge. And that’s a “regular” lawyer. Not a tax attorney.

In the end, the decision to do your own taxes is up to you but if you are self-employed (especially here in New Mexico) it may be a “false economy.” The amount of time and money you may have to spend to fix your mistakes could be more than just hiring the right #taxpro in the first place.

 

 

The Tax Girl (Kelly Phillips Erb) has an excellent post called 12 Questions to Ask When Choosing a Tax Preparer. It’s a great post, especially if you have actually narrowed the list of possibles to a few probably qualified candidates. My list of 5 questions overlaps some with hers, but is geared more toward finding that short list in the first place:

  1. What are your credentials? (CPA, Attorney, EA, Annual Filing Season Program Completion, etc.) Kelly covers that in her post or for more information click here or read this earlier post. You might also ask about professional affiliations. Is the practitioner a member of the NATPNAEAAICPA, etc? While membership in professional organizations does not necessarily indicate competence, it may indicate a certain level of seriousness about the profession.
  2. How much continuing education do you normally do each year? Each credential comes with its own requirements. Note that CPA and Attorney continuing education requirements do not necessarily have to be in tax matters while those for Enrolled Agents and the AFSP are specific to tax matters and professional ethics. In my opinion 15 hours of continuing tax education each year is the bare minimum for maintaining professional competence. I am required to have 30 hours per year (the EA credential requires 24 per year average over three years, my NAEA membership requires 30 per year). I usually take 50 or more.
  3. How long have you been preparing returns and how many returns do you prepare each year? Experience isn’t always required, but it is helpful. I was talking to someone a few years ago who said that she had a former IRS employee interested in buying her tax practice. She said that during her first conversation with him it came up that he had never actually prepared a tax return. Depending on the complexity of your return, that could be important. The number of returns prepared per year speaks both to the preparer’s experience and to his or her availability. My personal opinion is that even with outstanding office processes and a certain amount of support staff it is difficult for any one preparer to handle more than 250-300 or so returns per year. Now, if that preparer is part of a larger office where interviews and data entry and other tasks are handled by support staff the number could be larger (even much larger). This is more of a judgment area for you. How much personal interaction do you need/want with your preparer? Are you willing to pay more for more/better access (some preparers offer ‘concierge’ service for a premium)? The answer to those questions may help you to determine if your potential preparer is right for you.
  4. How much experience do you have with my type of return? If you have rental properties; live abroad; are clergy; are in the military; have income from multiple partnerships, trusts, etc.; or if the return is a business entity return (or any number of other highly-specialized situations) it is important that your preparer have experience with that type of return. People who routinely work in multiple states (truck drivers, pilots, flight attendants) need specialized support as do farmers, ranchers, and professional fishers. It’s OK to go with someone who has only limited experience, but you should be comfortable with their ability and willingness to research the necessary issues (which is one reason why that continuing education question is so important). For example, I recently declined a potential client because I don’t generally do returns for retail businesses (the business return side of my practice focuses more on the needs of freelance professionals and personal service providers).
  5. How will you protect my information? Don’t expect an extremely detailed explanation, but paid preparers are required to have a written security plan. That should include computer security (firewall, malware protection, and update schedules are the bare minimum). In addition to computer security, the preparer should also have policies on staff training (if applicable) and physical protection of your information (how paper files, laptop and desktop computers, and backup media are secured). Finally, you should ask about their data storage and backup plans. This post contains a few more specific questions related to computer security. Again, don’t expect specifics, just enough information to ensure that your data is reasonably protected from being damaged, lost, or stolen.

Notice that not one of these questions is “How much do you charge?” Preparer fees exist on a continuum and those competing on price alone are rarely your best option. Cost is always a concern and, as someone who also does personal finance coaching, I would be remiss if I told you to simply throw caution to the wind and to hire whomever you want. Many preparers can and will give you an estimate based on prior year’s tax returns if the current year’s return is expected to be similar. You can download Tax Therapy’s Quote Request here. When evaluating cost consider the preparer’s credentials and continuing education (those are expensive to maintain), the office overhead (support staff and large offices are obviously more expensive to maintain than a lone preparer working out of a home office), and level of service provided (can they represent you, are they in the office all year, etc.). As with all financial decisions trade-offs exist. Find the preparer that best meets all of your needs and realize that may not be the lowest cost option. Of course it is important to remember that higher price is not a guarantee of quality service. As always, choose wisely, choose well.

Many years ago, when my kids were still little, I mentioned to my friend, Julia, that we were having a birthday party at a kid-oriented pizza franchise (to remain nameless). She promptly responded “I have a strict policy of not eating at restaurants that have rodents as a mascot.”

I remembered this on the drive back from lunch recently when I saw the guy (talking on the cell phone) dressed as the Statue of Liberty waving the sign for one of the big tax franchises. I’m not against tax franchises in general. Some of the best, most experienced #taxpros I know either got their start at a franchise or own/operate a franchise.

I’ve said often that price should not be one’s primary consideration when choosing a tax preparer. I blogged recently about the importance of having a preparer who is serious about technology and information security issues. I guess another consideration should be a certain seriousness about the profession. The person preparing your tax return is holding your financial life and identity in their hands. You don’t necessarily want to choose the lowest bidder and you maybe want to reconsider choosing the one with the mascot.

In an earlier post I discussed the various types of paid tax professionals and at the end I mentioned that, at an absolute minimum, your preparer needs to hold a valid preparer tax identification number (or PTIN). Ghost preparers are paid preparers who do not hold PTINs. They are often (but not always) small, independent, tax season only preparers using software meant for personal preparation (such as TurboTax) to illegally prepare returns for other individuals for pay.

Update (February 8, 2019): Read what the IRS has to say about ghost preparers here.

The main difference between a true ghost preparer and, let’s say, your aunt who files your return using her copy of TurboTax and you slip her $50 bucks for her help is that ghost preparers hold themselves out as actual tax professionals, often to family and friends, but often to others as well.

The problem with ghost preparers (and for that matter your aunt) is that they have absolutely no accountability to the IRS or to you, the taxpayer, for their work. They do not have to comply (or even pay attention to) safeguarding your personal information from disclosure or theft. They do not have to abide by any ethics rules. And they do not have to help you (often they are not allowed to help you) if you receive a notice from the IRS for an audit or any other issue that pertains to your tax return. Their responsibility ends once your return is filed whether correctly or incorrectly or, worse still, fraudulently.

So how do you avoid using a ghost preparer to prepare your income tax return? Before you give the preparer any information make sure s/he has a PTIN. If the preparer doesn’t know what you’re talking about run, don’t walk, to another preparer. The IRS Return Preparer Office has a searchable directory that you can use to determine if your preparer has a PTIN but it does not include those who do not have not obtained any professional credentials or qualifications. If you’re still unsure, check out this article by The TaxGirl (Kelly Phillips Erb).

Think you’ve seen a ghost preparer? The easiest way to tell is to look at the signature area of your tax return. Under the signature block there is an area that says “Paid Preparer Use Only”. That block should have your preparer’s name and contact information. Older returns may have the preparer’s PTIN; newer returns often have the PTIN masked. If it says “self prepared” your preparer is a ghost preparer. Remember, if your return preparer used your return to commit fraud his or her name isn’t anywhere on the return. You effectively own that fraud.

So please, be careful when choosing a #taxpro. Of all the options available you should be able to find one who both meets your needs with respect to the level of complexity of your return and your price requirements. Remember you are entrusting this individual with your identity and most if not all of the details of your financial life (and many of the details of your personal life). It’s too important a decision to make quickly or based on price alone.

 

Well, what are you paying for when you hire me to prepare your tax return?

You are paying for my time, my education (at least 30 hours of tax education every year), and my experience. When you hire me, you will get a thorough review of your situation and your return—not simply data entry. Putting numbers in boxes? Cat does that, then I review the numbers, the results, the instructions, and the law and make sure your tax return is as complete and accurate as it can be before I e-file it for you. You also get some face time (or phone or e-mail time) with me. You get time with me—the person who prepares your return—not a cursory review of your return with an admin or junior staffer and a 5-minute handshake with the partner who signs it. You get a 30-60 minute appointment to review your return and talk about next year. Additionally a certain amount of phone and/or e-mail time throughout the year is built into the price of the return. If you need a more involved consult, I’ll always let you know that before I simply send you a bill for the time. And while someone else may answer the phone, schedule your appointment, or call you back with an answer it will always be me providing the answers. And you get answers and explanations that you can understand and I will work with you to ensure that you understand what is on your return before it is filed, not just say “sign here” and push a button.

Why am I “so expensive” compared to box software?

First and foremost, box software is a “do it yourself” option. You buy, download, and install the software. You download the information into it or enter it yourself. You answer the interview questions and your questions about those questions are answered by someone in a call center, not by someone who has reviewed (or prepared) prior years’ returns. You push the button to e-file the return. You follow up to make sure the return was accepted. And then you do it all again next year. If you have questions during the year or get a notice, you are largely on your own. When you hire me, I do your tax return, not my computer.

As a paid preparer, I have obligations that people who prepare their own returns do not. If you are claiming the American Opportunity Credit, the Earned Income Credit, the Child Tax Credit, or file head of household, I have a boatload of due diligence and extra paperwork to do to ensure that you are eligible for those credits. If you’re doing your own return, you just fill out the form and that’s it.

As a paid preparer I am responsible for your information. When you prepare your own return, if your computer gets hacked or your information gets stolen the only penalty involved is the work required to fix the problems. I on the other hand have a huge amount of potential liability and exposure because I am expected to keep your data secure. I am actually required (all paid preparers are required) to have a written information security plan.

I am not, however, required to have either professional liability (malpractice) or information security insurance but I have both. Why? Because it is the responsible thing to do. Because I don’t want to go out of business because of a data breach (although I do everything in my power to prevent that from happening) and I have no intention of disappearing if I happen to make a mistake on a tax return. I try my best to do accurate returns, but tax season is long and short at the same time, I am human, and mistakes, while rare, do happen.

Finally, like anyone else who owns a business, I have overhead. Your fee pays for my rent, my phone and internet, Cat’s salary and payroll taxes, my equipment and furniture, my tax and security software and licensing, my continuing education and reference materials, and whatever is left over after the bills are paid pays me. This is how I earn my living. I’m not trying to rake you over the coals. I know plenty of preparers who charge what I charge (or more!) and who cut corners on software, security, education, insurance, etc. That isn’t me. I charge what I consider to be fair prices that are in line with national and regional averages and that provide me with fair compensation for the skills I have (and that I continue to maintain) and for the work I put into preparing your return.

Good #taxpros always strive to add value above and beyond simply putting numbers into software. If yours doesn’t, please give us a call (505-352-0058) or send us an e-mail. We are accepting new clients.

Can I? Sure. Will I?

The main reason we will not e-mail you copies of your tax return (or any other sensitive tax information) is that it is illegal for us to do so unless the e-mail is encrypted. Not password protected…encrypted. I’ll be the first to admit I am not an information security expert, let alone an information security professional, but I am pretty paranoid. Simply sending you a password-protected PDF file is not enough to meet the required standards. The type and level of encryption required to send tax documents via e-mail probably eliminates the reason for doing so in the first place, namely convenience.

I have many clients tell me that they “don’t trust the mail” and would rather use e-mail. E-mail may seem (may be) more reliable than postal mail or a commercial carrier such as Federal Express but it is nowhere near as secure. With a hard copy mail carrier your information leaves its destination in a sealed envelope (I like to use Tyvek envelopes because they are also less easily ripped and don’t disintegrate when wet). It also arrives in that same sealed envelope and it is usually pretty easy to tell if it has been mishandled or tampered with somewhere along the way. E-mail provides no such security. Once your “envelope” leaves your mail program it is routed through whatever computers make most sense to the internet. And unless you are a cyber security expert, there is no way to tell just how many stops your message made or if it was opened and read along the way before arriving at its destination. It’s similar to the difference between mailing a letter in an envelope and mailing a postcard. That’s why we are required to encrypt your private information if we are going to send it via e-mail. That ensures that anyone who tries to read it can’t (your “postcard” message is written in a really strong code that can only be decoded if the person who sent the postcard originally gives you the key to unlock the code). Again, most people are looking for a convenient way to send/receive documents electronically and all this code making and breaking is extremely inconvenient.

Clients can, of course, e-mail their documents to us but I recommend that they don’t. I prefer that they don’t. I won’t even look at e-mailed documents from non-clients. To make it easier for new and existing clients to send and receive electronic documents Tax Therapy maintains a secure file portal that is integrated with our tax software. A secure file portal is an internet location where each user registers and is provided access to only those documents intended for him/her. It is the best option for electronic delivery of documents (to me or to you).

We appreciate the opportunity to meet your tax preparation needs and want to assure you that your privacy and information security are extremely important to us.