Ashby

Dr. David Ashby is a Certified Financial Planner and the retired Peoples Bank Professor of Finance at Southern Arkansas University. He holds degrees in accounting and business administration and a doctorate in finance from Louisiana Tech.

A few years back, my wife and I got a letter from the IRS.

The first paragraph of the letter stated that the IRS had misapplied a tax payment we had made to the wrong year. The second paragraph of the letter stated that the IRS was billing us a $15 penalty as a result. I went back and reread the first paragraph. Yes, it did indeed say they had misapplied our payment. So I was wondering why they were charging us a $15 penalty for their mistake. The next day I called the phone number given on the notice to ask to have the penalty removed. After 25 minutes on hold, I decided my time was worth more than the $15 penalty so I hung up.

Well, that was back in the good ole days. Since then, I believe IRS customer service has only gotten worse. Between budget cuts resulting in reduced staff and increasingly complex tax laws, it seems the IRS is just overwhelmed.

I’ve had occasion to call the IRS recently, been on hold for 45 minutes or so, and then received a recorded message that they’re simple too busy to deal with me today and I should call back another day. I would have preferred to get that message 45 minutes earlier on the call. That old oxymoron, “I’m from the government and I’m here to help you,” may never have been truer. After saying all this, I’ll probably get audited!

For those of you who process your own tax returns each year, I admire you for tackling that task. But you should be aware that access to the IRS for help is likely to be unavailable.

If your tax return includes items beyond W-2 income, some interest and dividends, and a standard deduction, you may want to consider a professional. Tax law is complex and it’s easy to miss things or make a mistake in preparing the return. But tax professionals stay up on tax law and prepare hundreds of returns each year, many with situations just like yours.

The tax preparer will use up-to-date software that catches any recent law changes. In many offices, your return may be prepared by one individual and then reviewed by another. So the odds of a missed deduction or errors on the return go way down.

While return preparation fees vary depending on the complexity, a tax return may cost you several hundred bucks. But that fee can easily be recovered in the form of deductions you may have missed, or errors you might make that cause you IRS dealings in the future.

There’s another benefit to using a professional tax preparer. They can often advise you of things to consider in the current year to reduce your next year’s tax bill. Maybe you should contribute to an IRA account, for example.

But be aware of the time constraints on tax preparers during the filing season. The majority of those returns have to be out by April 15. That puts an incredible burden and long work weeks on the tax preparer from now until April 15.

So, when you pick up your tax return and related documents from the firm, this is not the best time to sit down with an hour’s worth of questions for your accountant. They have other returns they’re working on to get out the door. A better solution, and one well worth your time: schedule an office visit during the summer to discuss ways to manage your taxes for the coming year.

To be fair to the IRS, when I have gotten through to IRS agents over the years, either by phone or in person, I have generally found them to be polite, professional and helpful. But it looks like help from the IRS is going to be in short supply this filing season.

Dr. David Ashby is a Certified Financial Planner and the retired Peoples Bank Professor of Finance at Southern Arkansas University. He holds degrees in accounting and business administration and a doctorate in finance from Louisiana Tech.

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