Sunday, April 3, 2016

Who Is It That Actually Prepares Your Income Tax Return?


What Block Advisors is promising is giving people access to the type of relationship that many people have with CPAs and EAs and even the occasional preparer.  Somebody who knows the tax law in a practical sense and knows and understands you and tailors their practice to your foibles or perhaps practices tough love to get you more organized. If you are ever audited they will defend you tenaciously and if necessary fall on their sword for you.  When it works really well they will complement your personality, reassuring the timid and restraining the overly aggressive.

I doubt that a publicly held company or a large CPA firm will be able to create the culture that will deliver on that model.  My reason for thinking that is that it is pretty clear that as firms grow in size, they reach a point where they become incapable of delivering that type of service as they become obsessed with their leverage models.

The reason that the H&R Block”Who actually prepares your return?” question is the money shot is that at many national and large regional CPA firms, the answer will be “Somebody in India“.

At my last job in a not quite Big 4 firm, more nimble you know, I referred to them as “our brothers and sisters in Bangalore” and frankly, they did an OK job, although it often seemed that American staff spent more time getting work prepared to go to India than they might have spent actually doing the work.  What didn’t go to India, needed to be “pushed down”?  It sometimes seemed like we would soon be asked to have roommates of interns do the actual work, so we could all be more consultative.

The thing is the book length tax returns that people of complex affairs tend to have are really pretty hard to do and the most gifted preparers are among the least rewarded people in the profession. Plans hatched by the brilliantly consultative are of little value if they don’t actually get translated into returns.  Getting into the weeds of the returns is necessary to do good planning. Planning and compliance really need to be seamless.

So bottom line, I think Block’s suggestion that you meet the person who is actually preparing your return is a challenge worth making to whoever is seeking your business.  If you are dealing with a CPA firm, there is a decent chance that they will not be as charming and well-dressed as whoever is trying to reel in your business, so be prepared to be tolerant.