EMD Individual/Small Biz Tax Advisor   Issue 2018-00

Welcome to the newest edition of the EMD Individual/Small Biz Tax Advisor Annually, millions of taxpayers are lured away from common-sense by crafty and persuasive ads, so let’s bring taxpayers back to reality, before they regret it.

We’re all constantly flooded with these recurring ads, whether it’s on our smartphones, TV’s, radios, or via mail flyers.  Every year we see a different “paid” spokesperson, creative gimmick, catchy slogan, or tempting promotion.  Half of these ads are by franchise tax prep companies that are usually located within retail stores, shopping plazas or malls.  The other half of these ads are by self-prep tax software companies that are available via internet download. 

The franchise tax prep companies do their best to convince you that their tax preparers are tax experts who can prepare your taxes at discounted prices.  However, the truth is that most of their tax preparers have other full-time jobs in different professions completely unrelated to taxes, and merely work there seasonally part-time whenever they need extra money.  You have no idea how many times we’ve seen taxpayers lose thousands of dollars due to errors by these tax preparers.  The reality is that unless a tax preparer is a Certified Public Accountant (CPA) with a Master of Science in Taxation (MST) and at least 10 years of full-time year-round tax experience, you should never trust them to prepare your tax returns or provide you with any tax advice.  You must have someone who can represent you with the IRS, if ever needed.  Also, we’ve seen that franchise tax prep pricing is not any less than the real tax experts since they need to recover the millions of dollars spent annually on marketing and lawsuits.

The self-prep tax software companies do their best to convince you they have magical tax software that eliminates your need for a real tax expert, but also claim to have tax experts available online for questions.  However, the truth is that no such magical tax software exists.  It’s basic software, with lots of bugs/glitches that cause costly errors, sitting on the Cloud waiting for identity-thieves to steal your data.  You have no idea how many times we've seen taxpayers lose thousands of dollars due to errors by self-prep tax software.  Real tax experts buy “professional” tax software that is light-years better, and very expensive.  Also, the self-prep tax software companies have no real tax experts available for questions since the real tax experts could never give up their most profitable time of year for the hourly rates offered to them by these companies. 

In either case, the franchise tax prep companies and self-prep tax software companies both have one main goal in common, which is convincing you to ignore common sense.  Unfortunately, they’ve been very successful in achieving their goal, partially because they rely on the following:

·       Powerful lobbyists hired to pressure the Gov’t away from “requiring” a license/certification for tax return preparers.  You can’t practice medicine, law, financial advice or even cut hair without a license, but somehow something as complex and important as tax preparation is permitted by virtually anyone! Taxpayers falsely presume that if the Gov’t permits someone to advertise and operate as a tax preparer that they must be qualified and licensed/certified.  Taxes are the main revenue source in this Country, so do you think the Gov’t minds if you overpay your taxes because you didn’t hire a real tax expert to prepare your tax returns?

·       Taxpayer delusion that if the Gov’t sends them a refund or accepts a payment, as filed, that the tax returns are accurate.  The Gov’t cross-checks a limited number of documents to ensure taxpayers don’t underpay, but rely on audits for ultimate verification.  In most cases, if you overpaid taxes, they won’t refund you unless you request it, and there’s tons of tax court cases confirming, upon audit, even if the Gov’t knows you overpaid taxes, if you can’t prove it timely, they’ll keep your money. 

·       Taxpayers don’t understand the Cloud and believe their personal data is safe, but every year self-prep tax software companies and franchise tax prep companies are hacked by identity thieves.  Millions of taxpayers have their data stolen annually since their software stores all data on the Cloud.

·       This is the era of do-it-yourselfers.  Every year millions incorrectly self-diagnose their medical illnesses answering simple questions from a reputable medical website, until they actually visit a licensed/certified doctor.  The logic with self-prep tax returns is exactly the same.  You may save a few hundred dollars in fees, but may lose thousands of dollars in refunds, and never enjoy the piece of mind they’re prepared accurately.

·       “Everything’s right, until you get audited”, but most taxpayers never get audited.  There’s no doubt millions of taxpayers that didn’t have their taxes prepared by a real tax expert will owe thousands of dollars, if selected for audit, while millions of taxpayers lost thousands of dollars in refunds.  Meanwhile, taxpayers think everything’s fine, which is perfect for franchise tax preparers and self-prep tax software companies making the errors.

·       Taxpayer misconception that they may blame tax preparers for errors on tax returns. The Gov’t permits you to choose your tax preparer, and tasks you to choose wisely.  Ultimately, you’re responsible for your tax returns.

·       Taxpayers often confuse intelligence versus expertise.  Intelligence means you are generally smart.  Expertise means you are extremely experienced and elite in one specific area.  The fact is, no matter how smart you are, you can’t be as accurate or maximize your tax refund like a real tax expert, in the same way the real tax expert can’t be as good at your profession as you are.  Real intelligence is recognizing this, taking full advantage of it, and never losing your common-sense!

As a reminder, never let anyone (including yourself) handle your tax-related issues, without a Certified Public Accountant (CPA) license, Master of Science in Taxation (MST), and a minimum of 10 full-time years of tax-specific experience.  For specific questions or additional information regarding this newsletter, please call EMD at (401) 434-6623 or e-mail us at

As always, thank you for the opportunity to be of service!

Respectfully yours,

IRS Circular 230 Disclosure: Any federal tax advice contained in this newsletter, if any, is not intended or written to be used and cannot be used as a covered opinion described in Treasury Department Circular 230 and therefore cannot be relied upon to avoid any tax penalties under the Internal Revenue Code or to support any federal tax transaction.