Picking the Right Tax Advisor

What you want is a champion, one who will push the IRS to the full extent of the law.

Most of us tend to forget the original meaning of "champion." A champion originally was one who fought for the greater welfare or glory of another—thus, someone who "champions" a cause. In the days of chivalry and mail-clad knights, at the tournaments the jousters would fight to be their lady's champion.

In the same sense, the tax man today—whether he (or she) be accountant, lawyer, or tax practitioner—champions the cause of the put-upon taxpayer. The IRS and its functionaries are less than interested in seeing justice done for the average taxpayer. The tax man does a little to set the imbalance straight, and he is even more the "champion" because of the forces arrayed against him and the taxpayer. How should you go about choosing such a champion, should you want or need one?

Of course, popular myth has it that the tax expert is only for the "big guys," the people with the money to pay such experts to uncover and defend big-money loopholes. Only the ubiquitous chains such as H. & R. Block are for us middle-class taxpayers, the myth has it.

Well, nothing could be farther from the truth. It so happens that many of the best tax experts do most of their business with the middle-income groups, and quite a bit with poor people (even welfare recipients!) who are being attacked by the IRS. All you need to do is seek them out ("Let your fingers do the walking," as the jingle says).

Why pay a tax man at all? you may first ask. It is true that there are books designed to enable the middle-income taxpayer to do his or her own return, but there are a number of different reasons you may still need the help of a tax man.

Maybe you have a special situation that only an expert can figure out. Or you've come to a part of the tax law that you think will save you money, but you just can't figure it out. Or you're being harrassed by the IRS to pay more taxes you know you don't owe, but the auditors won't listen to you. Or you're being audited and are terrified of being victimized.

All of these situations can and do come up. There's no shame if you find yourself "under the gun" in one of these (or another) ways. The thing to do, once you realize you're not figuring out the system, or it's out to get you, is to start making moves to find that "champion"—someone who spends all his or her time doing these kinds of things and who is an expert in getting things done in favor of the taxpayer.

Besides, let's face it: the income tax system in America is so big and so complex that even the experts don't know everything about it. How can they expect us common taxpayers to understand the gigantic mess? We can't. And if you've recently come into some money, or you suspect you're in a situation where you might be able to save some real money, or even if you just want to find out if you can do things to save more money…then you'll want to consult a tax man.

There's still another benefit too. When you have an expert tax champion handling your tax returns and any problems that come up, you have peace of mind, which is worth quite a lot to many of us.

The most important thing to remember, when you're thinking of whether to consult a tax expert or not, is that you must talk to him before you do something, not after. And you must consult him before any all-important time limits have passed by, not after. This is probably the biggest complaint tax practitioners have about clients and potential clients: the embattled taxpayer often waits until it's too late to do anything before consulting the tax man, when the whole problem might have been solved easily if the consultation had taken place earlier.

A word to the smart taxpayer should be sufficient. If you've moved into uncharted financial waters; if you're about to go into business; if you've recently received a chunk of money and are contemplating what to do with it; if you're buying or selling real estate (including a house); if the IRS is breathing down your neck or it looks like they might be soon—go find a tax man. Now! Remember, you don't have to hire a tax expert only to do your tax returns: you might want to consult him only about a specific financial problem or question, which is fine. Whether he does your entire return and tax situation all year long or just talks to you about a specific question, chances are he can move toward solving whatever the question is that's bothering you.

Say you've now decided to pick a tax expert to help you with your income tax or a specific problem. How do you actually go about it? Do you want to talk to an accountant or a tax lawyer or a tax practitioner? How much will it cost? Where do you find them?

The first two things to do are easy. Talk to your friends and acquaintances about who does their tax problems. There's no quicker way to find out about a very good tax man or a very bad tax man than by talking to people who have dealt with them. If you find that a friend or two has someone to recommend, put the person down on your list and interview him or her. The second thing you can do is look in the yellow pages of your telephone directory. You can usually find tax experts listed under a heading like "tax return preparation" or "income tax preparation." Just look around until you find the right place.

Sometimes you'll see a broad heading like "income tax" that tells you to see the headings "accountants, attorneys, bookkeeping services, tax return preparation." You'll want the one that says "preparation" in it. This is because some accountants do tax returns and are experts, some lawyers do tax work, and some bookkeeping services also operate tax return preparation services—but the real pros are the ones who work full-time only in the tax area, that is, the tax preparers. Some states allow lawyers to advertise the specialities—including taxation—in the yellow pages. Most do not, however, so it's usually hard to pick out a tax specialist lawyer. But no matter. Because law is such a tight monopoly, you'll find that lawyers are particularly expensive anyway. On the other hand, some tax preparation experts actually are lawyers: they just don't advertise themselves as such because of bar association rules.

So get that list, whether from recommendations of friends or from the yellow pages or both. Look in the yellow pages for individuals and small firms offering an income tax preparation specialty. Don't bother with the big chains if you want to take any aggressive stance toward the IRS and the tax laws in general. Look for the expert and dynamic individual or small firm to do the work. They'll be the ones who are "lean and hungry" and willing to push the IRS to the fullest extent under the law, and that can only be to your benefit.

Once you have a list of tax practitioners in whom you're interested, your next step is to talk with them. Call each one up and tell him straightforwardly that you're looking for a tax preparer/advisor and would like to interview him. Don't be shy about this—you have a right and a duty to yourself to find out the experience and attitudes of the person who will be handling your tax finances. If one tells you he doesn't have the time or doesn't talk without a fee, simply write him off the list. They need your business, not the other way around.

When you have interviews lined up with several of your prospective tax preparers, write out a list of questions you're going to ask them. Take it right into the interview with you and ask the list of questions right down the line, making notes as you go along. What kind of questions might you want to ask? Here are some examples:

How much experience have you had? Specifically, how many years have you been in the business, and how many returns, roughly, have you handled?

What is the range of your services? Do you specialize only in federal income tax preparation, or do you also handle state income taxes, financial planning, audits, appeals, etc? (The more versatile a tax man is, the better it is for you—all those services in just one person!)

What is your educational background? Are you an accountant? A Certified Public Accountant? A lawyer? (This area isn't really that important—some of the truly great income tax specialists who have been in the business for decades have spent their lives doing only that: tax.)

What is your attitude toward government in general and the IRS in particular? (This is a crucial question. The great tax specialists are fighters and aren't afraid to proclaim it. If you get a weak, waffling answer, or similar nonsense, cross that one off the list. You want someone to aggressively champion your cause, not someone working for the government on a free-lance basis.)

Are you admitted to practice before the IRS? Do you handle audits and appeals for tax returns you prepare? (These two questions should be asked together. Anyone can be admitted to "practice before the IRS"—all it means is that the person has been formally recognized by the IRS to represent taxpayers. And the preparers don't have to be accountants or lawyers, either. On the other hand, the IRS will use this device to try and drive the aggressive tax practitioners out of business—by denying them the right to formally represent clients. The result is that some of the best tax specialists do handle audits and appeals even though they aren't formally admitted to appear before the IRS. What happens is that they simply accompany the taxpayer through the whole process, telling their client what to say, when to say it, and how to say it. This burns the bureaucrats up but makes for aggressive tax savings.)

What is your range of fees? What can I expect for my situation? Do you charge only one fee for the whole year, or do you charge extra for handling audits and representing me in tax appeals? (Don't take a noncommital answer on the fees. Although it is difficult for a tax man to say exactly how much your particular situation might cost, he or she generally can come up with a pretty fair ballpark estimate. You will also find that the better tax specialists will charge you one fee—possibly a high one too—at the beginning of the year when he or she does your tax return. Then for the rest of the year you may call or write for help on any tax problem you might have without further charge. This also includes handling audits and tax appeals. Other tax people may prefer to charge a lower rate at the beginning of the year, then charge you according to how much more work your particular situation demands. The first way is handier because you know you have your own expert champion ready to come to your aid all year long—at no further expense to you. That's like buying good insurance; you won't have to pay any more no matter how bad your situation gets. And your tax man will almost invariably give you good service because he wants your business next year.)

Lastly, take a look at the overall situation and personality of the tax practitioner you're interviewing. If he or she strikes you as soft on the fight against rising taxes or scared of the government, you'd best cross the name off your list. This is because tax men have to be fighters: all the forms of intimidation and harassment the government utilizes are not reserved for the taxpayer only; such harassment is also directed against tax preparers themselves. They must be able to withstand such pressures in order to fully serve—and, more importantly, protect—your interests.

A good fighter will come right out and tell you that he thinks every taxpayer should take each and every deduction allowable under the law (which may not always be the same thing as what the IRS says is allowable) and that he or she will fight to do just that.

How far will such champions go? One example is the tax expert Oscar Klee, in northern California. In the business for more than 25 years (he is neither a laywer nor an accountant), Klee has run for Congress two times, battled agents trying to illegally seize the financial records of his clients and fought year after year to establish new deductions under the law that the IRS refused to recognize. When Klee refused on constitutional grounds to reveal certain information on his own tax returns, numerous court battles were fought. Finally, the government managed to get a conviction: they put Klee, a one-legged man who walks on crutches, into a California medium security prison for dangerous felons in December, the beginning of the tax season. They let him out in May, the end of the tax season. But they couldn't stop him: during his months in jail he continued to do tax returns in the prison visiting rooms on weekends. He continues to operate his tax preparation business in northern California.

This is the kind of individual who can best defend your interests: a person who has expertise and experience, is tested in battle with the IRS bureaucracy, willing to champion your cause to the very end of every legal remedy under the law—and, most importantly, someone who is honest, who will not fabricate deductions or exemptions. If you can find such an individual to handle your taxes, hold on to him. He's just as valuable as having a good lawyer at your call. He'll save you money.

Copyright 1978 by the National Taxpayers Union.

Timothy Condon is a lawyer and a coauthor of the 1978 Income Tax Guide, from which this article is drawn.