Don't Be Your CPA's Client. Be Your CPA's Partner!

Even better, be yours CPA's Friend. As I have stated in my profile, I'm a CPA, but I don't do taxes. I know enough about taxes to be dangerous, but it is not my area of expertise. But I read a letter in the LA Times this weekend from a reader that was pretty funny. It is linked here. You may have to register for free to read it, but I will try to sum it up.

Basically, the reader was upset because he(I'll just use he) is being audited by the IRS because he didn't report some sales of stock on his taxes. He now has to pay back taxes, interest and penalties. And he is upset at his CPA for not catching this. The person apparently didn't receive his 1099 from his brokerage account so accordingly the CPA didn't know about it.

Here is the best quote from the letter: "I had no idea what a 1099 was and had no reason to know whether I should have had one. Doesn't responsibility for knowing such things fall on my CPA?"

Oh yes, the CPA should have gotten out his crystal ball and known this guy had a 1099 from his brokerage account. Actually from reading the entire article, both parties had areas of fault here. However in the LA Times' response to the letter there was another good quote that is the basis for my entire post:

"What's still unclear is whether your CPA actually made a mistake. In a follow-up e-mail, you said your CPA sent you a tax organizer that you ignored. These organizers typically have questions about investment sales that would have tipped your CPA off to your stock profits."

"If you didn't use the organizer and waited until the last minute to have your return prepared — when your CPA was at her busiest — it's probably not reasonable to expect her to have quizzed you closely about your entire financial situation."

It is not clear whether the letter writer waited until the last minute but that also could have hurt the writer.

Wow. The letter writer was his CPA's client. He should have been his business partner, even better, his friend. A CPA is only as good as his client that gives him his information. To try to show a comparable situation outside the realm of taxes, the situation above might be similar to this situation:

A guy takes his car to an auto mechanic. The auto mechanic asks "what is the problem here?" The customer's response: "Just have it done by the end of the day." He doesn't help the mechanic at all. So the mechanic spends his whole day trying to figure out why this guy brought his car in. At the end of the day he thinks he has taken care of almost everything he finds and is actually pretty proud of himself. When the customer comes back, he is absolutely livid when he finds out the mechanic didn't recharge the freon in the air conditioner. The mechanic tries to defend himself by explaining all the other things he fixed but to no avail. This is similar to the situation with the CPA above. The writeignoreded the CPA's questions, just dropped off whatever info he had and told the CPA to make magic happen!

I think we should all be our CPA's partner, not our CPA's client. Help your CPA help you. Yes, the CPA is still going to charge you, but you will get a lot better service if you put some effort in. If your CPA asks you questions or sends you an organizer, take the time to answer. Get your information to your CPA early. If your CPA calls you and wants to file an extension, its probably for a good reason. Go with it.

Or you can do what I do. Be your CPA's friend. One of my best friend's is a guy at my firm that is one of the smartest tax guys around. I share my financial information with him year round. He reads my blog also. We talk tax ideas throughout the year. Ok, so we are nerds. But I'm sure that I won't be missing anything on my taxes this year!