Many people think that preparing taxes for a living is an easy assignment.  Can I say that nothing could be further from the truth?

It’s not just filling in the boxes and having the numbers spit out the results.  I WISH it were so simple.  There are two big reasons why it’s so hard–even for many professionals.

1) The tax code is incredibly long, complicated–and carries contradictory incentives for taxpayers.  Sorting through all of them in indubitably not a task for a computer software program.  It requires sitting down with an individual, a business owner, a family–and determining what they most care about, and how to plan for it properly. Really, that’s the only way to do it.  Everything else is just after the fact, clean-up work.

Which is why it’s so critical to meet with someone in the fall to make sure that you’re set up to hold a tax position which represents the real picture of where you are going.  This is the essence of tax planning.  Some may say that this is overstating it–but after years of doing this, I’ve become convinced that it’s the truth.  I’m in the business of helping you fulfill your dreams by helping you hold on to as much income/revenue as possible!

2) The other big reason this job is no cupcake is what’s required to stay up to date with how the law changes…and it’s made much worse by what happens in Congress.

I have a bit of a rant this week,  which is triggered by last week’s news that 950,000 tax payers will have to repay portions of the home-buyer tax credit.  As YOUR advocate, this simply frustrates me to no end.  But there is hope, especially for our clients…

How The Legislative Process Creates Tax Cheats

You may have seen the news that Capitol Hill is stuffed with people who owe back taxes.  But that is not what I’m talking about here.  (That article is here: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/16/AR2010091601770.html)

Rather than pointing the a finger at the actions taken by Congress which hurt our voluntary tax payment system.

Now, of course, the truth is that we don’t have the choice to not file or not pay what the tax laws say we owe.  That’s why the IRS audits returns and has all sorts of mechanisms (liens, refund offsets) to encourage us to file by each April 15, and to do so correctly.

But even with payroll deductions, etc. we U.S. taxpayers are trusted to fill out forms, ensure the correct amount was withheld and let the IRS know what our true final bill was.  That’s called tax filing.  and if we discover that we owe the U.S. Treasury, then our system, as it stands now, relies on us to send in the necessary payments.  This, of course, is what we spend much of our time on around here–helping YOU to ethically, but ensuring you’re not overpaying.

But congress seems to encourage tax cheating.

They do this– probably unintentionally–by tinkering with our tax laws so much.  They change them sometime slightly, sometime quite a bit, and they do so constantly. What’s worse is the procrastination in the House and Senate.  I see this all the time.  As a regular course of business.

And these delays in tax changes–or the decision to make some laws retroactive months later (extenders, estate tax, etc.)–totally screw up basic tax planning, sometimes negating options that could have been used to legally lower the tax bill.

(Which, incidentally, is why I have to pay so much attention to what’s happening in the legislation.  I do this so you won’t have to!)

So some people cheat, and unfortunately, they feel justified in doing so.

Last week, I saw a blog comment by a tax filer which opened my eyes:

I did take the original tax credit and…felt cheated when the revised 2009 credit was passed.  This is especially true since I closed just 11 days too soon to take the revised credit.  So I will dutifully pay back the $500 credit on my 2010 tax return, but I will also find a way to skim $500 (read: cheat) somewhere else on the return (not hard to do since I’m self employed and can easily “forget” to report some income) and will continue to for the next 15 year.

That person was talking specifically about the first-time homebuyer tax credit and the many ways congress fiddled with it after its creation in 2008.  But there are plenty of other tax laws with similar histories that tick off filers enough so that they look for ways of getting payback when they fill out their 1040s.

Now I’m not condoning this taxpayer’s or anyone Else’s decision to “even up” the tax code where a person might find it unfair.  Life is unfair and taxes are a huge part of life.

But congress can do a lot to prevent such “they hurt me so I’ll hurt the tax system right back” attitudes by doing tax-writing job in a more rational and professional manner.

Until it does, then Capitol Hill is going to keep creating tax cheats.

But here’s where the hope comes in…

For my clients and contacts, you can rest assured that we are paying attention and will be on top of even the procrastinating legislation’s.  We’ll make sure you don’t make moves that you regret after the fact.

And the best way to help us help YOU is by giving us a call back to talk things through this fall–973-605-1212