Skylar Dubrow CPA On Hidden Fees Behind Popular Tax Chain’s “Free” Tax Prep
January 25, 2016
Skylar Dubrow, CPA
Blog
January 25, 2016Skylar Dubrow, CPABlog
This past week saw some pretty tough economic news. Retail sales numbers for 2015 were released and the results weren’t pretty. (Some commentary here: http://bloom.bg/1RwiUv5)
On top of that, the stock market has been taking a dive, and Wal-Mart announced the closing of 269 stores around the world (152 in the US), and the laying off of about 10,000 US employees. (Here’s a list of the stores they are closing, by the way: http://usat.ly/1Rwj2KS)
All of this has led to multiple calls from the usual voices that we are heading into another crash like we had in 2008 and that a terrible recession is right around the corner.
My thoughts? That may be true, but nothing is certain.
For some counter arguments, consider:
* In EACH of the past five recessions, we saw annual auto sales growth be negative for at least 8 months running before the recession officially began. Now? We haven’t had even one month of negative automobile sales trends.
* Gas continues to be very cheap, and (perhaps not coincidentally) the number of miles driven has reached a decade high.
* Flights were 85% full in December (which is remarkably high).
My point? You can make a good argument either way. In which case, it’s always smart to be prepared. I’ve written previously about how best to be prepared for financial emergencies, and it boils down to:
1) Keep yourself from falling into a pit of fear
2) Have some ready cash
3) Eliminate all your consumer debt
4) Slow down your monthly spending and adjust your cashflow towards savings
5) Automate some investment and/or savings
If you’ve done these things, then you will really be just fine. Don’t let the headlines pull you into their swamps — the media business model thrives on fear!
Lastly, and speaking of business models … I saw a tax business commercial the other day that I simply need to address.
Skylar Dubrow CPA On Hidden Fees Behind Popular Tax Chain’s “Free” Tax Prep
“The voyage of discovery is not in seeking new landscapes but in having new eyes.” – Marcel Proust
For various liability issues, I’m loathe to actually mention this company by name, but let’s say (for the purposes of this conversation) that there’s a big, popular company who made its fortune on the backs of lower-income taxpayers called H&P Black (a name picked completely at random). This company is flooding the airwaves with a brand new program offering “free” tax prep for federal and $9.99 for state.
Maybe you’ve heard about it? Well, like many such things, there are, shall we say … strings.
First of all, here are the restrictions: it only covers those filing the 1040EZ federal form, which covers only the very simplest tax issues. It can’t be used by anyone who has dependents, makes more than $100,000 per year, is age 65 or older, claims adjustment to income like alimony or tuition deductions, or itemizes their deductions. Thus, homeowners who deduct mortgage interest or people with large charitable contributions can’t use the 1040EZ.
Plus, filers have to pay fees for other forms and any other fees incurred which are conveniently not mentioned — and they have a tendency to pile up.
A few years ago, when this company first actually rolled out this strategy and was asked by stock investors why [said company] was doing this, an executive replied: “Our ability to monetize this program means a minimal impact on our net average charge,” Retail Tax President [for said company] Phil Mazzini told analysts. (Source: http://bloom.bg/1Rwmx47)
In other words: yes, we are offering “free” tax prep, but we still bring in the same fees!
It’s always enlightening to look at executive interactions with stock analysts to see why public companies do what they do, I’ve found.
So — in summary: don’t be seduced by the siren call of getting something for nothing. You usually end up paying for it, in a whole host of ways.
In fact, one of OUR revenue centers over the years has always been in fixing the mistakes made by these “big box” retail tax outfits and off-the-shelf software programs, and discovering loads of missed opportunities and overpayments.
(Because, speaking of software: do you remember when a former Treasury Secretary used the leading tax software to do HIS taxes, unintentionally created a bunch of errors with it, and then blamed the software itself for all of his tax problems in front of the Senate? Not an uncommon issue, I’m afraid.)
The old adage *is* an adage because it’s so often true: you get what you pay for. It’s the foundation for a stable economic system because it’s almost always true.
So yes — this article is certainly self-serving, as you can see. I can’t get around that, unfortunately.
But what I CAN do is make this blog post serve you even more than by simply giving you information.
Warmly,
Skylar Dubrow CPA
(818) 889-7285
The Dubrow Group, CPAs
Preparing a correct and accurate tax return is our priority. We proudly stand behind our work and if a mistake does happen that is our fault, we will immediate correct the mistake and gladly refund your money if requested.
If any penalties or interest are incurred due to our mistake, we will do everything we can to fix the problem and cover any penalties should they arise.
We feel so confident in our processes to account for all deductions and uncover hidden deductions that we guarantee that you will pay the lowest amount of taxes legally possible. We spend a good amount of time correcting and fixing other so called tax pros mistakes and oversights.
We are so committed to giving out clients the best service. We do this by taking thte time to understand our clients situation and asking the right questions to make sure every deduction is accounted for. And remember we work for you, NOT the IRS.
Not only do we prepare an accurate tax return, we will inform you of tax saving strategies and best record keeping practices should we see fit.
Starting January 1, 2017, all our returns come with our “Silver” Stress Free Audit Insurance, FREE with paid tax preparation. Our Silver package includes our full support when handling IRS and State Notices for the 2016 tax year. If you receive a notice, send it to us and we will work with you to organize the required documentation and we will respond to the IRS on your behalf.
“Many tax experts are predicting an increase in IRS audits (because of the system automation), as well as an increase in audits by the state”
Our Gold Package adds our representation for an actual IRS audit for the current year. Whether it be an “audit by mail”, or an actual audit at one of the IRS locations, we will work with you to compile all the necessary documentation and represent you in front of the IRS for no additional charge. Our fees to represent our clients in an audit scenario can range from $1000- $2500 & up depending on time and complexities.
Our Gold option is an optional add on service & not included with regular tax preparation. Gold protection covers the current tax year only regardless of when you get audited.
The IRS and state authorities are behind in auditing tax returns and matching reporting documents to tax returns.They are currently working on 2012 & 2013 years.
Our Platinum level package covers you for a period of 7 years. It Is just like our Gold package, but it includes the currtent year and 6 prior years. We will provide audit coverage for prior years tax returns, even if we did not prepare them.
How is that for taking care of our clients! Once the Platinum level package is purchased, only the gold level will be required in future years as the previous years have been protected by the one time Platinum purchase.
