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Many Unhappy Returns: How to Deal With a Bad Tax Relationship

April 28, 2022, 8:45 AM

When I was about nine years old, my mom took me to the local hair salon to get my hair done. I had straight brown hair. And every Saturday night, my mom would religiously coat my hair in Dippity Do and put me to bed with curlers so that my hair would be properly puffy for church on Sunday. But by mid-morning, my hair would have fallen and would again be stick-straight.

The stylist had an idea. It was too long, she said, and too thick. She would, she said, cut it and give me a double perm to make the curls stay in place.

I had dreams of looking very glamorous, like one of the girls in “The Facts of Life.” But when she was finished, I remember whirling around in the chair and my eyes filling with tears. I didn’t look like Blair or Jo at all: I looked like Annie. And even though she would later agree that it was not a good look, my mom gushed over my new do, paid the stylist, and we left.

Not every client experience will be a good one. And I’ve learned a few lessons as I’ve gotten older, worked with clients of my own, and managed a business. Understanding what to expect on both sides of the table is essential. Here’s a look at what I’ve learned and how it applies to tax preparation.

Lessons Learned

Taxpayers should temper expectations. As much as I wanted it to be different, my straight brown hair was never going to appear bouncy and curly. I was limited by what I brought to the table. Similarly, your tax professional isn’t a miracle worker. If you haven’t done any tax planning all year, checked up on your withholding, or paid attention to cryptocurrency and other transactions, your tax professional can’t simply wave a magic wand to make things different.

Tax professionals shouldn’t overpromise. While I should have dialed back my expectations, the stylist shouldn’t have promised me the moon. Your reputation as a professional suffers when you underdeliver—so don’t overpromise. It’s important for tax professionals to be clear about what to expect in the tax preparation process—from the timing of completing work to the expectation of a refund or payment due.

Taxpayers should not be afraid to speak up when not satisfied. My mom told the stylist that she had done an excellent job, even though it was clear that it wasn’t a flattering cut—far from it. But she didn’t want to be rude. There is, however, a difference between being ill-mannered and simply speaking up. The latter can be done civilly. If you’re not happy with your tax service, be prepared to explain why, using concrete examples like “You told me the return would be ready on March 1" instead of overly general complaints like “It’s late.”

Tax professionals should be prepared to defend their work. Frazzled taxpayers can often feel blind-sided by a return delivered later than promised or more tax due than expected. If there are reasons to explain an unhappy result, tax professionals should share those with the taxpayer, such as “You didn’t get me your records by the due date,” instead of ignoring complaints.

Taxpayers should ask if there’s a solution. If you’ve seen “Legally Blonde,” you know there was a solution to my poodled hair: jumping in the shower. Washing your hair shortly after a perm will relax the curl. If we had asked at the salon, we might have received that advice or some other solution that would have saved me a few tears on the way home. Don’t assume that a bad result will remain a bad result: Taxpayers should ask questions about how to potentially mitigate an unexpected tax bill or penalty. There could be an easy fix.

Tax professionals should offer fixes where possible. My current stylist always asks if I’m satisfied or if I want my hair a little shorter. And once, when it was just a little too brassy, she suggested we add toner. I was grateful for the suggestions. It’s important to acknowledge that things aren’t always perfect—and see if you can make a quick fix. Some tax professionals do this automatically—maybe they’ve run the numbers with a different filing status or suggested an extension to buy time to look for more ways to save. If the amount due was overwhelming, they might recommend applying for first-time penalty abatement. When there’s a fix, making it known as quickly as possible can be a real value-add for the taxpayer.

Saying Goodbye

So what happens if things are irretrievably broken despite your best efforts? In that case, taxpayers and tax professionals alike should be prepared to acknowledge that it’s not a great fit and say goodbye.

At the end of the relationship, it’s important to remember that taxpayers are entitled to copies of their tax returns and records. And taxpayers should pay for services rendered—holding out on an undisputed fee simply because you’re unhappy isn’t appropriate.

Reporting Bad Tax Preparers

But if there are bigger problems, bad tax preparers can be reported to the IRS.

If the behavior has impacted your tax return or refund, such as filing a tax return without your knowledge or consent, altering your tax return documents, misdirecting your tax refund, or using incorrect information to generate a larger refund, you can report it to the IRS using Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit or Form 14157, Complaint: Tax Return Preparer.

If you have received a notice or letter from the IRS, you’ll mail the forms together with the supporting documentation and a copy of the notice or letter to the address contained in the notice or letter. If, however, you did not receive a notice or letter from the IRS, you’ll mail the forms with all supporting documentation to the address where you would typically send your Form 1040.

If your tax return and/or tax refund has not been impacted, and the tax preparer is simply engaging in unprofessional behavior like failing to turn over copies of your returns or include a Preparer Tax Identification Number (PTIN) on your tax return, fill out Form 14157 and send it together with all supporting documentation to the IRS by fax (1.855.889.7957) or mail: Attn: Return Preparer Office, 401 W. Peachtree Street NW, Mail Stop 421-D, Atlanta, GA 30308

If you believe that your identity was stolen, don’t file Form 14157. Instead, you’ll want to file Form 14039, Identity Theft Affidavit. This will cause extra scrutiny of your returns, so don’t file unless you have good reason to believe that your identity has been stolen—being ticked off at your tax preparer doesn’t count.

Depending on the tax preparer’s credentials, you may also want to report them to their professional licensing and/or disciplinary boards.

  • To find out how to report an attorney, contact the disciplinary board or state bar association in your state.
  • To find out how to report a CPA, contact the state agency that licenses CPAs in your state. The AICPA maintains a list of state agencies.
  • Because Enrolled Agents (EAs) are federally licensed, there is no need to report them to a state accountancy board or state bar association—Form 14157 is sufficient.

Relationships—of all kinds—are a two-way street. Putting the necessary time and work into making it successful can reap the rewards for both sides. And even when things don’t work out, there are lessons to be learned. Trust me, I haven’t tried to perm my hair in years.

This is a weekly column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

To contact the reporter on this story: Kelly Phillips Erb in Washington at kerb@bloombergindustry.com

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