Tax law too sophisticated for standardized software program

David Leeper
| Special about the El Paso Times


Taxes 101: Submit to a tax advisor or software?

As the tax deadline approaches, the most important question to consider is: should you hire a tax professional or use tax software? We explain.


Today I want to address a number of questions that I am often asked by individuals who have to make decisions about their taxes. So here it goes:

1. Home tax preparation software gaps

There are a variety of computer software programs that will prepare and file your federal income tax return for you. This is to avoid the time and expense of hiring an accountant or tax advisor to take your documents to an appointment and wait for the return to be completed.

I am not in favor of these programs and would encourage you to use an accountant or tax advisor to prepare your statement. The reality is that tax law is too complicated for standardized software to adequately represent.

I have found bugs in the software program on several occasions that harm my customers. I have also found a multitude of possibilities that were lost because standardized computer programs did not recognize them. I also think there are ways to look at a variety of circumstances that a tax professional can use to lower your taxes but a computer cannot.

Finally, when a mistake is made and a penalty is imposed, it is much more difficult, and often almost impossible, to overturn the penalties if you prepare to return yourself. Relying on an accountant to make a mistake is a well-accepted excuse for reprieve.

And of course, always this: When you are audited by the Internal Revenue Service, you want to make sure that your accountant is meeting the agent and not you in person.

2. Trouble with tax advertising on TV

I continue to receive a number of new clients who previously used a TV advertising company with an 800 number to represent them before the IRS. I recently had to meet with the manager of an 800 number to discuss where they represent a mutual customer.

Folks, the reality is that IRS agents are often as dissatisfied with the quality of service you get over those 800 phone numbers as I am when I need to repair the damage they have done to your case. It breaks my heart to learn how much money has been paid to these companies, what shoddy work has been done, and the hostility the IRS agents have over it.

I know cable television and internet advertising are popular today. Nonetheless, I would urge you to do your research and hire someone who does not have such an advertising budget.

3. Tax defense in order to obtain penalties

The IRS appears to be looking for companies that have failed to submit information returns such as Forms 1099 and W-2 in a timely manner. The same goes for the various foreign disclosure transaction reporting forms that should have been submitted with your return, but may not have been by mistake. These notices are typically computer generated and impose penalties that can result in enormous liabilities.

If you receive any of these criminal letters, be aware that there are a number of objections that can lead to them being put aside or toned down.

However, it is important that the correct document is submitted at the correct time and that the correct defenses are made with the correct department of the Internal Revenue Service. For practical reasons, if you do not do this in a timely and proper manner, you could lose your case by the procedure alone, regardless of the substance.

Again, it is important that you contact an experienced tax attorney as early as possible.

Folks, these are some of the questions I get asked a lot and I hope these answers are helpful.

David Leeper is a certified federal tax attorney with 40 years of experience. He can be reached at 915-581-8748, [email protected], or