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Find the right adviser


Here's how to measure a tax preparer's qualifications and performance.


Your 2001 Taxes

Find the right adviser

Jump to:
Choose article section...Proper qualifications Foresight Personal attention A compatible philosophy Freedom from sales pitches Reasonable fees

A good one can save you thousands—and help you sleep at night. Here's what to look for.

By Brad Burg

Last year, did your tax adviser guide you to deductions you'd never thought of? Uncover omissions in your records that could have proven costly? Suggest ways to shave the taxes you'll owe this year?

Or were you just paying for a number cruncher, devoid of insight into the gray areas of tax regulation? Did he leave questions half-answered? Or even miss filing deadlines?

If your adviser fell short, it's time to find somebody better. Here's what to look for.

Proper qualifications

Don't assume an accountant is a tax expert just because he's with a nationally recognized firm—or that CPAs have a monopoly on tax expertise. Some excellent advisers are medical practice management consultants, members of the National Association of Healthcare Consultants or the Society of Medical-Dental Management Consultants, or accountants who simply aren't certified.

Be aware, though, that the only advisers who can represent you before the IRS are CPAs, attorneys, and enrolled agents. What, exactly, are enrolled agents? Some are former IRS agents; some have passed the IRS exam to become an enrolled agent. Either way, the credential means they're authorized to represent you—as your "agent"—in dealings with the IRS. Enrolled agents, however, may not have the broad tax and financial background of CPAs.

If you'd prefer an even broader perspective, what about an attorney with a tax background? Of course, you'll pay more for that expertise. But when problems are complex—for example, when you've merged or sold a practice—this added training may be worth the higher expense. If you're considering an attorney because you're concerned about IRS problems, and you figure that discussions with attorneys are generally privileged, be careful: The privilege isn't all-encompassing. Information used to prepare your return, for instance, isn't privileged.

In any case, when selecting a tax adviser, start with references from doctors and other professionals you know. Then verify educational credentials and affiliations with professional organizations. Those include state societies as well as national groups, such as the American Institute of Certified Public Accountants and the National Association of Enrolled Agents. Also inquire into the adviser's background and experience.


Tax planning is just as important as skillfully preparing a return. "Your adviser should exhibit foresight, and not just be satisfied with reporting the same deductions over and over," says CPA John V. O'Connor Jr. of Albany, NY. "Foresight can also steer you away from pitfalls. For instance, your tax preparer may tell you that your Subchapter C professional corporation is in danger of having a profit at year-end. If it does, he should warn you: You'll pay tax on that money twice—first a corporate tax on the profit itself, then your personal income tax when the corporation pays the money to you."

"A good adviser will also discourage you from having your professional corporation own a medical building," O'Connor continues, "or you'll face another double tax when you dispose of it."

Personal attention

Retaining a big multi-partner accounting firm is likely to mean you'll pay for more expertise than you need—and you may get less. Senior partners at large firms are known to foist small clients on to junior accountants, especially for workaday matters like tax returns. Unfortunately, the same kind of handoff can also take place in smaller shops.

Still, you obviously have a better chance of getting personal attention from the top at a smaller firm. To improve the odds, the experts' message is: Keep a careful eye on who's tending to your taxes. "That assistant who shows up in your office 'to gather information' may in fact be the only accountant working on your return," warns Leonard Bailin, a New York City attorney and CPA. Make certain that the accountant you trust is the one who'll actually prepare or review your return.

A compatible philosophy

Sometimes disagreement with your adviser can be a healthy thing—for instance, it might lead to helpful debates about investment strategies. But what if you don't see eye to eye on whether to take chances with tax deductions?

Even here, a little friction may not be all bad. There are a lot of gray areas in the tax law. If you see them all in forbidding black, you may need a relatively aggressive adviser. Conversely, if you're too adventurous, a conservative accountant can keep you in check.

Many issues aren't clear-cut, of course, so there's often plenty of room to differ about how far you can push without breaking the rules. But nobody needs persistent dispute. Before you sign on with an adviser, make sure your basic philosophies are in synch.

Make sure, too, that the adviser speaks your language. When you're trying to decide what contribution to make to your retirement plan, you'll want to know its impact on your pocketbook, now and in the future. What you don't want is a learned dissertation on "accrued benefits" and "actuarial assumptions." Just dollars and cents, please.

But even worse than an adviser who confuses you with unnecessary erudition is one who assumes that some financial essentials are so obvious they don't need explanation. Or an adviser who doesn't review the finished package with you and your spouse or point out consequences you may not foresee.

Freedom from sales pitches

When someone is helping you with tax and financial planning, it's certainly reasonable to start discussing investment options. Be wary, though, if a tax adviser starts to pitch life insurance, a limited partnership, a manager for your retirement plan, or a trustee for your estate.

There's nothing inherently wrong with his making suggestions like that; they may be in your best interest. But the recommendations should be based on objective reasons. If you're being pushed to buy a specific investment, for example, find out whether your adviser is connected with the deal. To be safe, put the question in writing—and request a letter in reply.

Reasonable fees

Depending on your situation and the services you receive, a tax adviser's annual fee can be anywhere from $500 to $5,000 or more. You'll have to do some research to determine whether a fee schedule is reasonable. One way to start is to list all the services you'll receive, then ask your colleagues what they're paying for similar services. Also check the fees of several accountants or management consultants. If their charges are similar, you're getting a fair shake. If not, question your prospective adviser. Maybe you can negotiate mutually acceptable fees.

But never choose an adviser on rates alone. First-rate advice doesn't come cheap, but it could save you a lot more than it costs.

The author is a former Senior Editor of Medical Economics.


Brad Burg. Find the right adviser. Medical Economics 2002;3:75.

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