Prior Year Reviews

[travis bickle]

Welcome GRich

Hope you had a good season; hope you continue to grow your business and your tax expertise; welcome to the board!

Travis:

I am curious about the HRB interview screens. This is my first year doing taxes so I was reviewing old family returns, etc. My grandson was in the Air Force in Germany for 4 years and moved back to the US in 2006. He worked in Germany for a private US company the last half of 2005 and the first half of 2006. HRB prepared 2006 return here and computed his moving expenses from Germany, but did not ask questions to determine he was eligible for Foreign Income Exclusion. I amended and he received a sizable refund.

. . . .
Are there prompts on HRB screens, for instance, that would advise preparer to check for Foreign Income Exclusion, when someone moves back to the US from a foreign country?

Well, not trying to be rude, but you answered your own question -- Nope. By the same token, the other year I used PPC Thomson's tax software and neither do they have such a screen.

This all goes back to my original contention -- A large number of problems come from faulty interview technique or interview documents.

And, if a first-year preparer can do this, what happened to the original preparer? Since the original preparer did the moving expenses, the preparer obviously knew the client moved/relocated/changed jobs. But, since that same preparer did not do the FIE it seems most likely that the original preparer was inexperienced and did not have a clue about that topic and should have sought help. This is an example of: To Thine Own Self Be True -- i.e., don't pretend to be something you are not.

My wife and I also own a restaurant. I offer free second looks to my employees. One employee had taxes done at HRB and was eligible for additional Recovery Rebate Credit. HRB RRC Worksheet determined the correct amount she was entitled to, but did not carry it over to her 1040. My thoughts in both cases was that preparer should have been more involved in getting them their money.

If I read you right GRich, you are again echoing my thoughts.

If you remember correctly, apparently the service itself got swamped with returns with incorrect RRC issues, because they slowed the whole process down checking this out and rejecting some [I think it was code 269 - I am too lazy to look it up now].

But, there was a direct link on the IRS website to allow anyone to check how much had been received, so I do not know how anyone could misbs that.

Anyhow, I am NOT saying that HRB has the best preparers, NOR am I saying that HRB has the worst preparers, just that it depends on the individual preparer and primarily the interview technique, I think.

I think this horse is dead, so I hope he RIP

[GRich0656]

HRB Interview Screens

Travis:

I am curious about the HRB interview screens. This is my first year doing taxes so I was reviewing old family returns, etc. My grandson was in the Air Force in Germany for 4 years and moved back to the US in 2006. He worked in Germany for a private US company the last half of 2005 and the first half of 2006. HRB prepared 2006 return here and computed his moving expenses from Germany, but did not ask questions to determine he was eligible for Foreign Income Exclusion. I amended and he received a sizable refund.

My wife and I also own a restaurant. I offer free second looks to my employees. One employee had taxes done at HRB and was eligible for additional Recovery Rebate Credit. HRB RRC Worksheet determined the correct amount she was entitled to, but did not carry it over to her 1040. My thoughts in both cases was that preparer should have been more involved in getting them their money.

Are there prompts on HRB screens, for instance, that would advise preparer to check for Foreign Income Exclusion, when someone moves back to the US from a foreign country?

[AZ-Tax]

Complimentary Reviews

I currently and have advertised only in my church bulletin for 5 years now. From May thru Nov I am going to try something different and change my ad to read: FREE 2nd opinions for 2008, 2007 & 2006 completed and filed tax returns. I am hoping to recruit new clients for the 2009 tax season and maybe I will have some amended returns to do. We will see.

[travis bickle]

I think this horse is dead enough for burial,

My guess is that Block is very generous in their definition of "error." (Well, client did not include the 96 miles he drove to the pharmacy to pick up his monthly meds.) . . . . For simple returns, I can get a pretty good feel for things by merely looking at the return briefly and then asking a couple of pointed questions. That is gratis and creates goodwill for new clients. If something needs repairs, or the return was a disaster from the gitgo, then my normal fees apply. FE

but I have to admit if Gary saved his two clients $1000 or $2500 then I doubt it is a case where the client did not mention "the 96 miles he drove to the pharmacy to pick up his monthly meds".

And your comment about asking "a few pointed questions" goes back to my earlier comment -- why did the original PAID preparer NOT ask those questions to begin with? I -- as well as everyone on this board -- have "war stories" to share. One 2nd look I did this year involved a client who came in with a 1040A. For some reason, the original PAID preparer forgot to ask for non-taxable income to include in sales tax computation, property taxes paid, or form 4684 instances [client had his pickup stolen, no recovery]. For a PAID preparer to overlook these basic issues seems bizarre to me -- but, as I said, we all have "war stories" we could trot out.

So, maybe you are right. Maybe HRB does "inflate" what it deems to be an error.

Maybe not.

By the way, $29 only cover the 2nd look, it does NOT cover the cost of a 1040X, Sch A, Form 4684, or other required paperwork; at that point, full price is charged.

[FEDUKE404]

Not all reviews are created equal

Yes, at H&R Block, we do enter all the data required to prepare the return.... I have no idea where H&R Block gets its statistics.

My guess is that Block is very generous in their definition of "error." (Well, client did not include the 96 miles he drove to the pharmacy to pick up his monthly meds.)

Just about any computer generated return will be "correct" barring excess use of the override function. It is probably a waste of time to check such a return for errors by merely reentering the data.

The only thing that really works is a complete interview. For simple returns, I can get a pretty good feel for things by merely looking at the return briefly and then asking a couple of pointed questions. That is gratis and creates goodwill for new clients. If something needs repairs, or the return was a disaster from the gitgo, then my normal fees apply.

Many returns are reviewed with a simple "everything looks OK with a cursory exam" comment. I've had a few where the client comes in saying his accountant messed up - and frequently he is quite correct! And then you have the sticky situations where it is obvious the client owes a LOT of taxes, and I was not involved with the original return in any way. Some clients will go back and let the original preparer fix things (and pay the interest/penalty) whereas other clients say "No way I'm going back!" and I remedy their situation with as little pain as possible.

FE

[Gary]

2nd look

Yes, at H&R Block, we do enter all the data required to prepare the return. I did about nine 2nd looks this season, Seven were correct and I amended one return and saved the client about $2500 and another one about $1000. The larger one was obvious. He prepared it on TurboTax, and on schedule D assumed the basis of all sales was 0. I have no idea where H&R Block gets its statistics.

[RLymanC]

How Much

to generate a Sch. C-EZ and type in $700 income and $500 expenses. I don't even charge for this.

[RitaB]

Agree

87% of statistics are made up on the spot.

[JohnH]

--> One of the most cogent statements I have seen on this board -- and it applies whether posted by someone from HRB or by someone in private practice. Allow me to share with you my favorite homemade statistic:
"Fifty percent of the people you meet are below average". <---

Yeah, but statistics are unreliable 90% of the time.

[Nashville]

Lake Wobegon

Travis you can't possibly be from Lake Wobegon, MN where "all the children are above average."

Thank you for your very candid response, and don't lose any sleep whatsoever if anyone tries to slam you for telling the truth.

[travis bickle]

Here you go,

Are you saying HRB reviews all the original documentation, input documents, etc., and conducts a client interview as if they were a new client? Do all HRB offices follow the same procedure?

Yes. Yes.

But, the majority of the people who come to HRB have very un-complex returns [in my PERSONAL consideration].

Travis, if you're an HRB employee. Please explain how HRB defines an error and how they determine the average amount saved by their "second look", I think most of us believe the statistics presented in the HRB ads are misleading. If that's not true, it'd be nice to know. I'm also wondering what % of those with a "second look" are self-prepared vs professionally prepared and what % of the errors are items overlooked and not-communicated to other preparers.

First, I am not high enough in the food chain to know how HRB determines its advertising and marketing policies world-wide. So, there is no way we will know what % is DIY-ers as compared to professionally prepared. Second, an "error" at the tax desk means that the final figure on the return, as done by HRB, differs from the originally presented return. Whether or not an error exists because of information not communicated to the original preparer -- I PERSONALLY consider this to be the fault of the original preparer's interview technique, or interview documents [I KNOW I will get slammed on this].

[As I read over this text before posting it, I cannot help but believe that virtually everyone on this board places great reliance on their interview technique or interview documents.]

I have had numerous people tell me "My other preparer did not even ask me about that" [Of course, all of us on this board have had that experience]. The point is though, which person at the tax table is the tax pro? The client? Or, the preparer? Should not the preparer be the one to look for the income? [I KNOW I will get slammed on this].

Unfortunately, statistics can be easily be manipulated to the point where although misleading, they're factual.

One of the most cogent statements I have seen on this board -- and it applies whether posted by someone from HRB or by someone in private practice. Allow me to share with you my favorite homemade statistic:
"Fifty percent of the people you meet are below average".

[BHoffman]

I bet any client could come up with some sort of "self employment" if pressed hard enough, file a Sch C with a loss and the tax goes down.

Guy came to me this year with a return from 2007 prepared by one of the chains. He makes glass bead jewelry and sold around $700 at yard sales and he rented a booth at an arts and crafts fair. Sch C.

Has no intention of actually profiting from this. He's happy to make sales to cover his supplies costs.

So I guess it's a matter of opinion sometimes. I can disagree and say this guy has a hobby and not a business. Someone else could say the opposite without necessarily being wrong. However, the amount they charged for the Sch C and depreciation and home office deduction, etc. far exceeded the actual tax benefit he got from this.

[Zee]

HRB does a complete review for $29 under their "Second Look" program. The tax preparer doing a Second Look enters all the client's information into their system from scratch and does a complete return, comparing the HRB result with the original result.

Are you saying HRB reviews all the original documentation, input documents, etc., and conducts a client interview as if they were a new client? Do all HRB offices follow the same procedure?

Travis, if you're an HRB employee. Please explain how HRB defines an error and how they determine the average amount saved by their "second look", I think most of us believe the statistics presented in the HRB ads are misleading. If that's not true, it'd be nice to know. I'm also wondering what % of those with a "second look" are self-prepared vs professionally prepared and what % of the errors are items overlooked and not-communicated to other preparers.

Unfortunately, statistics can be easily be manipulated to the point where although misleading, they're factual.

[travis bickle]

My apologies

And that is a complete review? The errors I find are not normally calculation errors or input errors like not putting client info in...but errors where someone hasn't asked "did you buy a new car this year" (sales tax deduction)...and medical expenses (itemized)..etc. Or on business schedules there are always all sorts of missed deductions (home office -"my tax preparer told me I'd get an audit...I don't claim that" or depreciation calculated incorrectly.

I charge regular rates to review and amend. And I pretty much always find errors or some kind or other.

because I did not explain the process in my other post. It is a complete review and not a cursory review. As the tax preparer enters the data into the software, there exists a litany of questions on each and every screen [Sch A items, Sch C items, Depreciation screens, OIH screens, Other Income screens, Pension Plans & IRA screens, etc ad nauseum] which the preparer has to answer [after discussing with the client, of course] by checking Y, N or entering the appropriate data.

It is the same process as preparing a new return. So, the preparer is not merely copying data from a different return.

[erchess]

Prices are higher in HI

Just look at the Federal Perdiem rates.