Some Enrolled Agents worry that explaining the details of their tax preparation work will only confuse clients. Others are concerned that individuals will no longer need Enrolled Agent tax services after learning too much from candid discussions. Both fears are misplaced. Open dialog with clientele is the optimal process for uncovering all relevant information for accurate results.
Among the standards for maintaining an EA license is gathering all necessary facts and circumstances from taxpayers. Doing so necessitates pointing out a few features of how taxable income is determined. Nevertheless, mistakes are still possible even when thorough communication does occur. Some errors are mathematical and others entail correct treatment of an item in accordance with the tax rules.
Unintentional omissions of income or incorrect claims of deductions are most likely to occur when conversations with taxpayers are incomplete. Faulty information is usually the root of Enrolled Agent jobs that deliver misstated income or deductions. Mathematical errors are overcome by tax preparation software. But, EAs cannot afford to become lazy about checking software-generated tax returns.
The superior process before finalizing a tax return for submission to the IRS is review with the taxpayer. Of course, in-depth entanglement with all tax calculations is not feasible. That would demand taxpayer possession of the same breadth of expertise as Enrolled Agent training provides. However, EAs who hold back from describing general income tax standards inhibit taxpayers from participating in assurances of accuracy.
A sound foundation is simply describing for taxpayers that income and deductions for distinctive situations are reported on different schedules. For example, having a home office is separate from the business to which it holds a connection. This discussion averts having home office expenses mingled with business transactions. An additional benefit is certainty that the qualifications for a home office deduction are met.
Taxpayers who are exposed to tax preparation generalities are inclined to develop an appreciation for the deep skills possessed by Enrolled Agents. Methodical communication with EAs gives individuals the comfort that a full range of tax ability is being applied to their returns. People can never fully understand the significance of a tax practitioner who has passed the Enrolled Agent examination merely by seeing the EA initials after the professional’s name. Taxpayers need to see the quality of EA work in action. This necessitates comprehensive review of tax returns with taxpayers.
Clients need to know what they are attesting to when signing their returns. They are ultimately responsible for the facts presented to the IRS. An honest EA should not refrain from careful discussions with clients due to unwarranted concerns about teaching them enough to become self-preparers. On the contrary, verifying figures that are conveyed on a multitude of forms utilizing extensive knowledge only supports client acceptance that tax preparation is best left to experts.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.