Tax Resolution Referrals: If you’re not doing this, you’re flushing away at least $50k/yr in tax resolution revenue

Let’s review some data that you’ve likely heard from me before.

Ready? Set? Let’s go!

Less than 10% of CPAs in tax practice offer any sort of representation services (per AICPA).

Less than 2% of EAs in private practice do anything that even requires their EA license (per NAEA).

The vast majority of lawyers that call themselves “tax attorneys” engage primarily in trust and estate tax work, not IRS Collections representation.

Lastly, there are approximately 400,000 unenrolled preparers (meaning, tax return preparers that are not an EA, CPA, or attorney), that legally can’t sign a Form 2848 to represent a client in front of Collections or Appeals, even if they’re an AFSP participant or a state-registered return preparer.

Add all those folks up, and you have approximately 670,000 tax professionals across the United States that either refuse to engage in taxpayer representation, or are simply unable to do so because they don’t hold the proper license.

But guess what?

All 670,000 of these tax professionals have tax resolution clients.

These are the tax professionals that prepare the majority of the tax returns for the nation’s 13 million tax debtors.

These are the tax professionals that see the payroll or bookkeeping problem long before anybody else does.

These are the tax professionals that know who the future tax debtors are before even the IRS does!

Are you picking up what I’m laying down?

These 670,000 other tax professionals — your colleagues — are coming face to face with tax problem resolution clients all the time. They are at the front line of the tax debt problem, and the vast majority of them don’t know how to help these clients.

That’s where you come in.

Since you hold the proper license, you can sign a 2848. Since you’re here, and have learned how to do tax resolution work, you can provide this valuable service to the clients of other tax professionals.

Let’s do some more math. If you look at IRS Collections data in the annual data book, you’ll see that roughly 1 in 14 American tax returns has a debt and enters IRS Collections. Assuming that 1 in 14 average carries across all tax prep clientele (it doesn’t, but it’s the best proxy I have), and if we assume that an average seasonal preparation firm does 300 returns a year, that means the average tax preparer sees 20 or so tax debtors per year.

Let’s say … Continue reading

Podcast Episode #4: How to Maximize Stress, Increase Anxiety, & Eliminate Spare Time with Dan Henn, CPA

Welcome back to the 4th episode of The Profitable Accountant podcast.

My guest today is Dan Henn, CPA. Dan hails from the Space Coast of Florida, where he is now in his 27th tax season. Dan holds bachelor’s and masters degrees in Accounting and Tax from the University of South Florida, spent 3 years at KPMG, plus 13 years at large regional firms before starting his own firm.

His office runs with a staff of five, focusing on real estate and medical taxation and taxpayer representation. He is very active in the FICPA, and teaches the annual tax refresher class for his local chapter, as well as dozens of live webinars and seminars each year on IRS Collections representation topics.

On this episode, Dan and I discuss the challenges faced in going from staff accountant at a large firm to transitioning into firm ownership, and how his experiences at different sized firms shaped his expectations for how his own business would run. In particular, we discuss perspectives on fees at different size firms. Dan shares his biggest sources of anxiety in growing his firm, and how he’s worked to fix those. Dan also discusses the best ideas he’s implemented from a practice management perspective to grow his practice.

Be sure to listen through the end of the episode, because Dan will share his reasoning for switching to a totally new tax software suite for the upcoming filing season, including what drove his search for new tools and the factors that went into that decision.

Dan’s book suggestions:

Any of the “E-Myth” books by Michael Gerber

“Getting Things Done” by David Allan

The Profitable Accountant Podcast provides short installments to help you operate a more efficient and profitable accounting and tax firm. On our website, you can find additional information about marketing for accountants.… Continue reading

Do I need to be a CPA, Enrolled Agent, or attorney in order to do tax resolution work?

This is a very common question that I get from unenrolled preparers, particularly those from states like Oregon , California, Maryland, and New York that have their own state-level tax preparer licensing in place.

Short answer: Unequivocally YES, you need to be an EA, CPA, or attorney in order to represent taxpayers in IRS Collections.

In order to sign a Form 2848 and represent somebody in front of IRS Collections and/or Appeals, an individual must be an EA, CPA, or attorney. Under current IRS regulations, this is non-negotiable. The IRS does not recognize any of the state-level preparer licensing programs for representation purposes.

Connecting with an EA, CPA, or attorney is a great way to be engaged in this work, but the unenrolled preparerer is limited to the tax prep and bookkeeping in support of the case. We have plenty of preparers that attend our classes in order to better understand the process that they’re supporting when working with an EA/CPA/JD on IRS Collections representation cases. In fact, many CPAs and attorneys send their admin staff to our classes in order to learn how to work cases.

But never forget that the tax prep and bookkeeping is the lower dollar value work, compared to the actual representation component. It’s the most labor intensive component of tax debt resolution, but it’s the lowest value work for the client case.

I personally encourage all unenrolled preparers to simply go take the Special Enrollment Exam (SEE) to become an Enrolled Agent. Most preparers can pass Parts 1 and 3 with limited or even zero study, and Part 2 is passable by most folks with a few weeks of intense study. Becoming an EA literally doubles your earning potential overnight, plus it’s also a hedge against the inevitable passage of a bill by Congress to give IRS authority to regulate preparers. Become an EA now, and you’ll bypass any impact of future legislation in this arena.… Continue reading