Neighbors With Tax Software are Poaching Clients From Professional Tax Preparers

Posted on by Adrienne Gonzalez

At least according to comments on this CPA Trendlines survey:

Ray Nations, a leadership figure in the Virginia Society of Enrolled Agents, is also looking at some setbacks this year, and pricing pressures aren’t helping. “Clients are either using on-line software themselves or are going to their friends, or coworkers or neighbors who have an online software program, and they claim to be an expert.’”

"It's cool, bro, I've used TurboTax three years in a row, you can trust me."

You may find other juicy nuggets in that post, with tax practitioners complaining about everything from a stagnant economy to depressing profits. Is the 2014 filing season really one of the worst on recent record?

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Don’t Worry, the IRS isn’t Getting Too Soft

IRS_logo-thumb-150x140.jpgIn 2004, Congress wanted to lay the smackdown on individuals and entities using tax shelters. In order to scare the beejesus out those thinking about the practice, Congress enacted penalties of $100,000 for individuals and $200,000 for entities per non-disclosure to the IRS.
Problem is, Congress, who often pulls out the jump to conclusions mat, didn’t give the IRS any discretion on enforcement so Mom & Pop (who often don’t have kids) shops were getting hammered with fines they couldn’t pay:

In one case cited by the Small Business Council of America, a husband and wife followed the advice of a consultant and set up a limited liability company and Roth individual retirement accounts. When the IRS challenged the way the transactions were done and found income tax deficiencies of $6,812, it was required to impose a penalty of $1.2 million.

The IRS figured that maybe, just maybe, this wasn’t really working the way it was intended and has suspended the collection of fines in order to make the penalties more proportional. Not to worry though, the IRS hasn’t decided whether or not apply the changes retroactively and are only suspending the fines until September 30. They wouldn’t want to tarnish their image as faceless cold-blooded bureaucrats.
IRS Halts Fine Linked To Tax Shelters [WSJ]