The Cost of Preparing a Tax Return

  • Nov 15 2017

Many times, clients do not realize what is involved in preparing a tax return and the liability that the tax accountant must bear. Others think that to prepare a return, you just enter numbers into the computer, push a button and the return is done. However, much more is required to correctly prepare a return. First, there is the knowledge of the tax accountant. Not only does the tax accountant or tax lawyer have a degree that required years of study, but she must continue to update her knowledge as the tax laws grow and change. Each year she must take courses to stay abreast of those changes. Further, she must know whether the program being used is correctly calculating a return. Even software programmers make mistakes.

To prepare a return with the complexity of the tax code, equipment is needed. No longer can a return be done with paper and pencil, as was the case when I started as a tax accountant and attorney. Whether the accountant is a small solo practice or a large practice with employees, technology is required. The main technology is the computer with the sophisticated tax programs. These programs must be secure and constantly go through updates to make changes as errors are found in the programs from the accountants using them and from changes in tax law. So the accountant must know after she enters the information into the program whether the tax program is correctly calculating the return.

Then there are other programs that may interact with the tax program, including the storage of information in a secure manner. This tax year, security was enhanced by the tax programmers. The security is to safeguard not only your tax information but your identity, as well. This has become a major crisis in the tax world. Accountants and lawyers are now being targeted, so they must upgrade their security for the protection of their clients. Some of this is mandated through both the associations they belong to and through the IRS. So, now, even small firms are required to have an IT person available to enhance the security of their computer and the programs used.

Both the Federal and State taxing authorities have increased mandates for security of your information that had to be instituted this year. Each of these aspects of a tax practice, whether it is the programs being used ,the computers where they are installed or the continuing knowledge of the practitioner increase the price of the return. So as the final days of this tax season wind up, you may now understand why what appears to be a simple tax return truly is not that simple and the expertise of your tax accountant is what you pay for.

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