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Another Tax Season Down — 2014 Tax Season Recap

The “unextended” part of tax season officially ended yesterday, but it actually ended for me late last week.

On Friday I finalized the last of the tax returns not going on extension, and got e-file authorization pages out to those people. So the last few days leading up to April 15th were surprisingly uneventful.

Last year I was able to write about delays and problems with applying tax law. I didn’t face that problem as much this year.

Instead, I’m going to write some “dear diary” thoughts that take you inside my head to show what it’s like to run a growing business:

One: I Know What It’s Like to Run a “Real Business” Now

As I’ve written about before, I started in 2009 by preparing 3 tax returns. From there, it’s grown to where I quit my day job at the end of 2011. But even then, I was mostly a stay-at-home dad who prepared tax returns on evenings and weekends during tax season.

That ended this tax season. I pushed past the 100-client mark, and had to send my son to daycare 2 days a week so I could get work done during the day. And I’ve taken on enough business clients now to where I have things that need done on a mostly full-time basis all year.

This tax season, I continued to make house calls and meet people “whenever and wherever.” That was a nice selling point when I was working with 30 clients and, even when chasing after kids, I had all the time in the world.

This year, the administrative burden of running a “real business” at times became too much.

Answering the phone, responding to e-mails, scheduling appointments, driving 45 minutes one-way to meet with someone for 3 minutes to pick up their things and then driving all the way back home, following up with people about missing information, keeping up with the things my ongoing business clients need, dealing with administrative things for my own business, being a stay-at-home dad to a 2-year-old 3 days of the week….

And, oh yeah — preparing tax returns.

Part of owning a business is adjusting the sails. I started making procedural changes toward the end of tax season, and will be implementing more.

Two: Using Your Cell Phone As Your Main Business Line is a Bad Idea

Clients have discovered that my business number is also a cell phone.

Once people find out your business line is a cell phone, the text messages start coming.

I normally don’t mind getting texts from clients, but sometimes a line gets crossed. For me that line is: when I’ve said the timeline is 14-20 days for getting the return completed, but the text messages start after 3 days.

And then another at 5 days.

And another at 7 days.

“How r our taxes coming?”

“R u done w r txs yet? Tks.”

“Do u know what r refund will b? We r hoping 2 buy (a car, a TV, a camper, a house, etc.) and need 2 c how much we can spnd.”

“U will tell us what r refund is as soon as u know right?”




Three: Almost All of My New Clients Came in February

Most years, the phone is ringing and e-mails are coming up through April 15th from prospective new clients who want to know if I can prepare their taxes. 

This year, from the first week of March through April 15th, I got exactly TWO inquiries. One of them became a client, one of them didn’t.

Not that I’m complaining. I had plenty of work to keep me busy, and my overall client count grew by about 39% over last year, so I had plenty of new clients this year. They just all came to me in February, and then the phone stopped ringing and the e-mails stopped coming. Weird.

So, there you have your not-so-brief journey inside my mind about how tax season went.

Am I a Hypocrite on Preparer Regulation?

Here’s something that’s been bothering me: I oppose government regulation of tax preparers. There’s a strong argument against more government intervention. And there’s a high likelihood that the regulation would be a failure. And there’s also a strong argument that Enrolled Agents would be hurt because we’d fall further to the fringes of the tax world.

I’ve made these arguments in numerous blog posts through the years, and I was even quoted in the court brief submitted by the attorneys who brought suit against the IRS over the Registered Tax Return Preparer program.

But I feel like a hypocrite because I have, at times, criticized unlicensed preparers for my own gain.

I have, at times, implied that the unlicensed are unprofessional when compared to EAs, CPAs and attorneys.

I have, at times, made comments about unlicensed preparers, wondering why the preparer doesn’t bother to take the EA exam.

These are things I grapple with as someone who posts opinion pieces about these things and whose opinion “makes the rounds” on tax blogs.

I oppose regulation of tax preparers. But yet, I will tout my own licensing at the expense of an unlicensed preparer if the situation presents itself.

Fair Warning: More Baseball Posts to Pop Up this Year

Some readers of this blog get greatly distressed whenever I journey outside the confines of the tax world (I’ve received comments such as “lose the Oprah crap” when I blog about things other than taxes).

Well, here’s fair warning: starting in April, you’ll be seeing more blog posts about baseball. Why? Because I’m a baseball fan and I feel like blogging about it.

The baseball posts will 1) only appear occasionally, not all the time (probably once a month or so), and 2) generally be related to numbers, statistics, quantifiable analysis, etc.

Not purely tax-related but definitely numbers-related, and something I care about.


What’s So Bad About More People Preparing Their Own Taxes?

Last week I read two articles on the CPA Trendlines website which breathlessly stated that there were “price wars” over tax preparation this year, and that preparers were losing price-sensitive clients. We also know that the number of tax returns being prepared by professionals has decreased this year, while the number of self-prepared returns has increased.

I, too, have seen some price pushback, but I don’t know that it’s any worse than it’s ever been. I’ve only had one semi-confrontation about pricing this year, when a client told me they were “shocked” by my fee of $175 for a tax return with itemized deductions. (I responded by pointing out that the competing CPA firm in my town charges $250 for that type of return, and that the regional average is around $200, so they were actually getting a bargain by working with me.)

That person paid my fee. But they may not return next year.

I expect 5-10% of my clients from last year will not return this year, mainly due to fees and/or the preferring to do it themselves this year.

And that’s okay.

Unless a practice revolves around volume, what’s so bad about a client leaving because of fees or because they prefer to prepare it themselves?

Unless you drop your fees down to TurboTax range, that type of client will never see value in what you do. You’re just someone punching numbers into a computer and pushing “send” on the e-file.

My goal is to have clients who actually need a professional preparer, or at the very least, people who could prepare their own taxes but who like the comfort provided by having a professional take care of it for them.

I’m always upfront in saying that if someone is capable of preparing their own tax return and they feel comfortable doing so, then they should prepare it themselves (or find a tax pro whose rates are cheaper than mine) instead of using me.

Tax Season Tunes

Gordon Lightfoot has been keeping me company this tax season. I have 102 of his songs loaded into my “Google Play” music player. Lately he’s all I’ve been listening to while working. I put it on random and just let Gordon sing away.

He’s coming to Cedar Rapids on the 20th and I’d really like to go, but alas, my wife is out of town to a conference that weekend and I’ll be home with the kids. So I have to be content with Gordon Lightfoot on my computer.

Here’s a sampling of other tunes I listen to while working when not getting my Gordon Lightfoot fix:

  • Neil Diamond. Generally not his “famous” songs. I detest — and I mean absolutely revile — “Sweet Caroline,” for example. The original recording is okay, but he’s turned it into a hokey, over-the-top, karaoke show-tune over the last few decades. Blech. I like the more introspective songs like “Shilo,” “If You Know What I Mean,” “Stones,” pretty much anything from his relatively new “12 Songs” and “Home Before Dark” albums,  and a host of other Neil Diamond songs that most people have probably never heard of.
  • An mix of songs that include Billy Joel, pop rock from the 60s and early 70s, Elvis, Willie Nelson, Conway Twitty, AC/DC, Juanes, Bon Jovi, CCR, Johnny Cash and Jimmy Buffett.

If I’m tired of listening to Gordon Lightfoot or Neil Diamond, I just hit “random” on all songs and see what comes up.

Why Doesn’t the IRS Push the EA Designation?

On the tax blog-o-sphere, those of us who work in the field go round-and-round periodically, debating whether or not the regulation of tax preparers is a good idea. We know that the IRS thinks it’s a good idea.

But one obvious question hasn’t been asked: if the IRS thinks that licensing of tax preparers is so important, why doesn’t it just push the EA designation?

The IRS already oversees the EA program. There’s no new infrastructure to put in place. No new exams to create. The infrastructure and exams already exist.

Yet throughout the IRS’s ill-fated attempts at creating the “Registered Tax Return Preparer” designation, the IRS rarely mentioned the EA program, except as a side note of “CPAs, EAs and attorneys are exempt from the RTRP testing.”

It’s baffling why the IRS doesn’t say much about the EA program. When I was asked by fellow tax pros recently if I support making the RTRP a voluntary program, I said no — just encourage the unlicensed to become EAs. And it makes sense that the entity charged with overseeing EAs (the IRS) should be the ones doing that encouraging.

The EA designation is the one and only designation over which the IRS truly has control.

For crying out loud, for years — YEARS! — the IRS would end press releases by saying to consult “your CPA or other tax professional.” It took lobbying by the National Association of Enrolled Agents to get the IRS to actually start using the term “Enrolled Agent” in that sentence of press releases. And that just happened in the last couple of years.

I know the IRS can’t be “rah rah EAs,” and I don’t expect them to be because that’s OUR job as EAs.

But IRS silence over the existence of the EA designation really confuses me.

Taxpayers Can Now Access IRS Transcripts Online

Taxpayers who need a copy of a tax return or a transcript can now access that information themselves through a new online tool at ID-10079518

This is a nice feature. But I also am mad at the IRS.

Here’s why.

Practitioners often need copies of tax returns or transcripts when we are helping clients who have problems with the IRS. Last summer, the IRS announced that it was taking away online processing of Power of Attorney forms. Getting a signed POA from the client is the first step for a practitioner to get access to those transcripts.

Before the IRS did away with online processing, it was a breeze. You’d have the client sign the POA, go to the e-services website and enter the POA information, and be able to instantly pull the transcript.

But now that’s not an option for practitioners. So we must either wait on hold with the IRS until we talk to a human and fax the POA while on the line (and there’s still a delay in the IRS systems getting updated to show the POA), or fax or snail-mail the POA (which really creates a delay). Then we can go out to e-services and pull the transcript.

Delays are not good because people often don’t seek help until right at the due date of a response to the IRS.

True, practitioners can enlist taxpayers to go online and instantly access their transcripts for us. But as the National Association of Enrolled Agents said in its weekly news update last week (my emphasis added):

(T)roubled taxpayers often arrive on an EA’s doorstep at the moment the exam or collection clock is ticking towards zero. In those cases, EAs will be able to work more swiftly by enlisting their clients to provide their own transcript information, notwithstanding the fact that many of them hire a tax expert because they don’t want to touch their tax troubles with a ten foot pole.

This is one step forward and two steps back. The IRS adds new technology that adds convenience for taxpayers while removing technology that added convenience for practitioners.

Image courtesy of Stuart Miles /

A Voluntary RTRP Designation?

UPDATE 1/10/14: Robert Flach has responded to this post with his own post, which you can find here.

In response to his question to me at the end of his post:

(D)oes this post change your opinion in any way? And what about my idea for a 2-tiered program?

I am opposed to the 2-tiered program. Any government-sponsored RTRP program — even a voluntary one — would harm EAs.

But I have no opposition to a third party taking over a voluntary RTRP designation. In his post, Robert addresses what would need to be done to make sure a voluntary RTRP overseen by a third party would actually have name recognition (as opposed to the ATA and ATP designations that already exist and that no one has heard of). I agree with him on how to achieve recognition.

But I think it would be a tough sell. How much demand is there, really, for the RTRP designation? Very few unenrolled preparers bothered to become RTRPs when it was required by the IRS. How many would become RTRPs if it was voluntary and overseen by a third party? Probably about as many as those who become ATAs and ATPs.


(Original post from 1/8/14)

Robert Flach at The Wandering Tax Pro Blog asked for my opinion regarding the latest idea being floated about a voluntary Registered Tax Return Preparer designation.

The mandatory RTRP as envisioned by the IRS is headed to almost-certain defeat in the courts. But Robert is proposing that the RTRP be kept, but made voluntary instead of mandatory, with the IRS providing oversight (or alternatively, having a private organization oversee it).

And earlier this week, the new IRS commissioner said he favors the RTRP being made voluntary if the mandatory option is struck down in the courts.

The idea of a voluntary RTRP is bad because:

  1. What purpose would it serve? It would be a useless designation no matter who oversees it.
  2. If administered by the IRS, it would harm Enrolled Agents.

Wants Vs. Needs

Robert asked my opinion on Twitter a few weeks ago, and I responded saying that there’s no need for an additional designation. Just encourage the unenrolled to become EAs.

That led to the following exchange:

Robert is confusing “wants” with “needs.”

I can understand that some unenrolled might want letters after their name. But that’s a “want,” not a “need.”

What would a voluntary RTRP designation “do”? Creating a designation for the sake of having a designation is a bad idea — especially if it means giving the reins to the IRS to oversee!

And as I’ve said before, an RTRP overseen by the IRS would almost certainly push EAs even further to the fringes of the tax world.

Private Overseer?

What about having a voluntary RTRP designation under a private overseer, rather than the IRS?

We already have voluntary tax designations offered by the National Society of Accountants (the “other NSA”). NSA offers designations called Accredited Tax Advisor and Accredited Tax Preparer.

NSA is a great organization, and I’m sure the folks who have attained the ATA and ATP designations are proud of their accomplishment.

But both designations suffer because: 1) no one has heard of them and 2) they have no legal backing.

No one’s heard of the EA designation either, but at least being an EA gives me the legal force to do things on behalf of my clients.

A voluntary RTRP overseen by a third party would fall into the scrap heap with the ATA and ATP designations because it would have no legal backing.

Bottom Line

If you can prepare tax returns without being an RTRP, and if the RTRP designation doesn’t allow a person to represent clients, what exactly would people who achieve a voluntary RTRP designation do with it????? What’s the point?????

I think my initial “tweet” in response to Robert covers my opinion on this matter best:

EAs are Partly to Blame for Our Obscurity

Enrolled agents toil in obscurity.

I’ve written about this before, such as this article where I ponder why EAs are such a crabby lot.

And this article, where I equate CPAs to the United States and EAs to Liechtenstein.

EAs spread around plenty of blame for our obscurity.

We blame our designation — the fact that the word “agent” is not well-received by the public.

We blame other people’s designations — the fact that RTRPs — if the courts allow the designation to exist — have the words “tax return preparer” in their name, which is, by default, better for public perception than “agent.”

We blame CPAs for thinking they are the be-all and end-all of taxes.

We blame the National Association of Enrolled Agents for not being proactive in marketing the EA designation.

We blame the IRS for creating the RTRP designation.

We blame the IRS for not requiring CPAs or attorneys to pass the RTRP exam.

We blame the IRS for not requiring CPAs or attorneys to show evidence of tax continuing education.

Some of these are valid points. I have used a few of these myself  – especially the criticism of NAEA for spending so much time on lobbying (or kissing up to the IRS while slamming unenrolled preparers) and so little time on public education about EAs.

But each EA is to blame, too. Myself included.

Yes, we are treated as the red-headed stepchild of the tax world. But a big reason for this is that we ALLOW people to treat us this way.

How many of us act embarrassed when a question comes up about our designation? Count me as guilty on this one.

I also catch myself acting apologetic about not being a CPA, or feeling a need to over-explain to people why I’m not a CPA.

I guess we can call this blog post “Jason’s Manifesto About the EA Designation.”

I’m tired of acting like a second-class citizen. Heck, EAs are more like third-class citizens or the weird relative in the attic. I’m tired of being treated that way.

It’s time for all EAs to say enough is enough and start demanding some respect for our designation. It’s time for all of us to proactively explain to our clients what an EA is. And we need to do it in a positive way, not a “WE HATE CPAS AND ARE ANGRY AT THE WORLD!” type of way (and unfortunately, that’s how a lot of us come across).

Since this is turning into a random stream-of-conscience rant, I’ll admit — I’m at 400 words in this post and am not quite sure how to conclude it, because there’s no real solution to what I’m ranting about. The problem is easy to identify: no one’s heard of EAs and we shoot ourselves in the foot repeatedly with our crabby attitudes and woe-is-us/angry-at-the-world attitude.

Now I’m really ranting and raving. That’s good and healthy sometimes. But the key question, which I’ve asked before and still haven’t found a good answer to, is: what are we going to do about it?

If EAs are Liechtenstein and CPAs are the U.S., What are the Unenrolled?

Where Lichtenstein is located.  (Image courtesy of Wikipedia)

Where Lichtenstein – kindred spirit of EAs – is located.
(Image courtesy of Wikipedia)

One time I wrote that Enrolled Agents are like Liechtenstein and CPAs are like the United States, in terms of name recognition and clout. But my article on that subject neglected to mention the unenrolled.

As of October 2, 2013, there were 46,795 practicing EAs, 214,267 CPAs, 31,972 attorneys and 395,908 unenrolled preparers. If we were to assign a country to the unenrolled, what would that country be?

I ask tongue-in-cheek of course (sort of). The point of my original article was to point out how little name recognition EAs have. The name “CPA” means “tax expert” to most people. EAs and the unenrolled can shake their fists at this fact, but it IS a fact. CPAs have won the PR battle against all other designations in the tax world. They are the USA of the tax world.

So in answer to my question about what country to assign to the unenrolled: I wouldn’t assign them a country, but rather a continent. Asia, perhaps? The reason being, some unenrolled preparers are excellent — every bit as good as (and maybe even better than) any CPA or EA. But others are the equivalent of third-world countries.

As a whole, the unenrolled have massive numbers and the potential for critical mass if they ever get organized.

And I guess I shouldn’t neglect attorneys, either. They’re small in number, but powerful. Great Britain, perhaps?

Comments are welcome. And I hope that readers of this article will realize that I’m trying to be whimsical with this while making a point about name recognition and respect.

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