Discussion:Tax consultant for a tax preparation company

Now, I don’t know this man from Adam but I am optimistic. However, just to be on the safe side I was considering only providing consulting services on an as needed basis, instead incurring this additional overhead with someone I don’t know. I figured if I did this for one year, see how the business progress then I can make a better business decision.

My question, I am not aware of such a structure, do you guys think this will/could work, without me losing a lot of my own profits? I was thinking about charging a flat hourly fee for everything I review and do for his clients.

I think it's better if you work as an employee rather than a consultant. As an employee you would fall under his E&O insurance.

I also would caution you that the inexperienced/untrained "he" is leaning heavily on your CPA license, and you don't even specialize in tax yet, so there are many pitfalls of the blind leading the blind. Open you eyes and watch out.

("but the CPA reviewed the returns - he is the one that should be assessed the preparer penalties, not me, I don't even know anything about accounting or taxes")

and Birdman, I don't see how he could get out of signing the returns if he is the one with the ultimate authority/responsibility in the firm}

(you're fooling yourself if you think you're not, CDE)

Mike Sylvester

What, are we running a fiction writing contest for the 4th of July? This makes no sense.

This will only pan out as described if he's the only tax person around for miles. And if he is, you have to wonder why no one else has had this great idea.

It seems far more likely that CDE will be loaning this guy lunch money, rather than worrying about his status as a consultant. But of course, I wish the young feller good luck.

Another option was to run everything through my practice and I will provide all the services but it would be based on his referrals. He is assuming that he could get a lot of clients through his insurance cliental. I didn’t like that option because he wanted to eat off my profits while doing nothing

In regards to preparer penalties, I personally witnessed a lot of errors being made, even with tax prep software, but never saw much come back on them. Some preparers, for reasons I still don't understand, were allowing earned income credit to folks who didn't qualify. In fact, I was berated verbally for disqualifying several people when they did not qualify for the credit. Go figure. I knew what the law was and I wasn't caving in to the boss's pressure. Next time I came upon such a circumstance, I went and had the boss come out and go through the questions so she could be the one to disqualify them instead of me. After that I didn't get anymore flack.

It seems like it's the wild west as far as the IRS is concerned. 95% of errors make it through the system without being caught is the impression I am left with. I worked for a wholesale/retail boot company several years ago. They had been in business for 3 years prior to hiring me. No one was knowledgeable of accounting or Quickbooks until I arrived. I found over a quarter million dollars overstatement of cost of goods sold in the 2 years prior to 2004. Revenue minus COGS resulted in gross losses for both years, 2003 having about a $135,000 Gross Loss!?#@$%! If you have a gross loss of that size on revenues of $250,000, something has either been recorded wrong or you are selling your products for less than you purchase them for. Why the IRS didn't catch this is beyond me. What was happening is that before I was hired they were double expensing every pair of boots sold. When inventory was paid for it was charged to COGS AND when the same inventory was sold it was also charged to COGS. This was never caught by the IRS. Again, getting by with huge errors through incompetence or outright fraud seems to me to be not that hard after seeing the circumstances I just described, both in the tax industry and in private industry. Seemingly, so many outlaws are roaming the prairie that the law isn't of much effect. There just isn't enough enforcement to put the fear of God into people.