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OPINION: Tax Preparation is Big Business

With CPAs, self-help software, and 38 registered preparers locally, tax preparation is big business

It’s a new year and tax season can’t be far behind. Nationally, 2016 saw more than 147 million individual tax filings, 127.2 million (88 percent) of which were E-filed and 74.5 million of the E-filed returns were prepared by tax professionals, and that’s big bucks.

According to the National Society of Accountants, the average cost of professional CPA tax preparation was $273 in 2015 for a “typical” 1040 Tax Form with itemized deductions (Schedule A) plus a state tax return. That would be a $20 billion market for individual filings nationwide. However, the average cost for the west coast, Alaska and Hawaii was much higher, $348 per return.

Be very careful when getting tax advice online, organizations such as the US Tax Center run by irs.com and similar sites actually have no affiliation with the U.S. Government. Look for the “.gov” in the Internet address to make sure you’re going to the source.

There are 38 registered preparers in San Benito county, with several offices in Hollister. There are also free tax preparation programs available.

The largest segment of tax preparation professionals in California are certified public accountants (CPAs). CPAs and some others are exempt from registering with the state. Others who assist with or prepare a state or federal income tax return for a fee must be registered as tax preparers with the California Tax Education Council (CTEC).

While the total number of CPAs and other exempt persons are unknown not all do tax work; the registry showed 38 non-exempt and non-CPA tax preparers registered locally as of December, 2017. That would equate to about 58,000 statewide.

Like all businesses sectors that thrive, tax preparers fill a need. That need is navigating the ever more complex tax code landscape at every level of government for those not requiring professional help to the level and expense of a CPA.

Every new tax bill is the occasion for hoopla and political attacks, but it also means difficulties in keeping up to date for the average filer. Until the system changes it may be worthwhile to find a CPA or experienced professional preparer.

Self-help tax software is also big business with 53 million filings in 2017, about half of them using Intuit's TurboTax. TurboTax products and services alone generated $1.47 billion in total revenues for Intuit according to ProPublica and Intuit has been accused of lobbying heavily against simplified tax systems; that should surprise no one.

Most individual filers are lending the federal government money at zero percent interest. In 2017 the IRS made 108.7 million individual refunds worth $302 billion, an average of $2,782 per refund.

I received a refund, but I did not get a thank you letter.

(Data source for filing and refund statistics: https://www.irs.gov/newsroom/ )

About:
Marty Richman (Marty Richman)

Born and raised in Brooklyn, NY, Marty (Martin G.) spent his teen years in northern New Jersey. He served more than 22 years on active military duty, mostly in Europe, and is a retired U.S. Army Chief Warrant Officer 4, Nuclear Weapons Technical Officer.Marty then worked 25 years in various engineering and management positions in the electronics and energetic materials industries supporting the communications, computer, aerospace, defense and automotive sectors. He is a graduate, summa cum laude, from The College of Hard Knocks, among his numerous awards and accomplishments. He was a regular weekly Op/Ed columnist and feature writer for The Hollister Free Lance for seven years and a member of its editorial board for five years. Marty is a frequent commentator and contributor to BenitoLink on a wide variety of local, state, national and international subjects. You can follow Marty Richman on twitter @Marty_Richman. Marty and his wife, Joyce, have been residents of Hollister since 1996.

Comments

I'm shamelessly plugging Barry Hauser/Mariposa Tax and Business Services in downtown Hollister. I've been patronizing this business for more than 10 years because they offer fast, efficient professional tax service at a very reasonable price. They also provide Notary services and financial consulting services.

I recently consulted with Barry regarding some potential financial planning/tax liability concerns related to my retirement IRA. He carefully reviewed my 2016 tax returns and conducted a financial analysis which resulted in my making an informed decision that will reduce my 2017 taxes. Thanks, Barry!

I tried using tax accounting software in the early 2000's and nearly had a meltdown trying to figure out how to do my own taxes; I have a Mortgage Credit Certificate (MCC) from when I purchased my new house in Hollister in 1995 which complicates my returns. In fact, one year the IRS audited my returns questioning the validity of the MCC. Barry supported me during the audit which was successfully resolved with THE FEDS.

Mariposa Tax and Business Services is also a bilingual/Spanish-friendly business and a real shining star in downtown Hollister. (I have no financial interest in this business, but I am a big fan.)

 

Barry’s the Man. I look forward to seeing him every year.  I, too, recommend Mariposa Tax Service.  Happy New Year to all!

Submitted by (Bob Huenemann) on

For those of you who have a financial consultant: Has your consultant ever mentioned index funds?

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