CONFIDENTIAL FILE

Phony Tax Expert Flaunts Shingle

It’s that season again.

Not the rainy season. That’s here, too, but it’s not the one I’m talking about.

I’m referring to the season when phony income tax "experts" begin sprouting up along our streets and sidewalks.

Every
spring they come out of hibernation. They camp anywhere — abandoned
store fronts, barbershops, even on their front porches. All they need
in the way of equipment is a card table, a couple of folding chairs,
and a reasonably sharp pencil.

They tack up a sign, "Income Tax Expert," and they’re in business. Ready to take the unsuspecting, confused taxpayer.

But before you get in line with the others, let me remind you of an experiment which I conducted last year.

I sent a member of my staff on a tour of the self-styled tax wizards.

He
left the office loaded down with a mythical name, mythical occupation,
some mock W-2 forms and a set of statistics showing how much he and his
wife earned and spent during the year 1957.

The first "expert" he visited charged $21 for alleged professional services.

The
"expert’s" conclusion: In addition to the $874 which Uncle Sam withheld
from my investigator’s hypothetical $7,635 income, the sum of $98 had
to be paid to the government.

A second "expert," with the same
set of facts and figures, decided that a refund of $101 was due. And he
arrived at that conclusion for only a $16 fee.

The difference in the two prepared returns was a startling $199 to the taxpayer.

But the biggest surprise was yet to come.

My
investigator took the same figures to an established, licensed public
accounting firm and found out that he could legitimately put in for a
$302 refund.

For the service, he paid $15 more than he paid Phony Expert 1, but he saved himself $400 in taxes.

Ironically,
the returns filled out by the self-styled experts could have been
challenged by government auditors, and the taxpayer could have been
forced to pay even more.

Poor Arithmetic, Errors

They contained both illegal deductions and mistakes in simple arithmetic.

It’s possible that a man with no credentials who sits at a card table in a vacant building is a mathematical genius.

But the odds are against it.

I’ve
talked with private tax specialists and government tax specialists. And
to the man, they agreed that a taxpayer in search of a consultant
should take the following precautions:

1 — Pick a man or a firm with a permanent place of business.

2 — Deal only with a licensed public accountant, certified public accountant, or an attorney who specializes in tax cases.

Twelve years ago the state attorney general’s
office came out with the opinion that income tax preparation is an act
of public accounting, and these are the only persons who are qualified
under the law to figure your income tax.

But so far, no one’s been willing to spend the time and money to test the AG’s opinion in court.

Maybe it’s time someone did.