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Wednesday, January 21, 2009

Tax Resources, Inc without Turbotax

For the first time in 15 years I won't be doing my own taxes for the previous tax year (2008). The reason is that last year's international assignment was long enough that I'll have to file taxes in both Germany and in the US, so my employee is going to take care of that for me. This is great, though as a paranoid guy, I'll probably be doing the taxes myself as well to double check what they do.

My biggest concern was with tax audit protection. I was handed a policy that included ambiguous statements about whether or not I would get support for dealing with the IRS. Given that I've received an IRS notice every year since 2004, I figured I'd take ambiguity out of the equation and suck it up and pay TaxResources, Inc anyway.

So I called them, and asked for a renewal. Because I was a turbo-tax filer, I got transferred to a different department. After I got to an agent, I asked if I could be covered despite not using turbo-tax. It turned out that I could be, just at a higher price, $50, rather than $35. Since even the retail package would be worth the $300/year that they charge (one of my friend uses a tax accountant, and according to him it cost him $200 per letter his accountant had to write to the IRS), I just signed up. I don't know whether you can only get this deal if you were a previous year customer, however.

In any case, that's how you get covered if you're not using Turbo Tax to file this year. And yes, every year since I've been using them, they have dealt with the IRS for me, and especially when I was in Munich, where it would have been hard for me to deal with the letters in time, it was a relief to hand it of to professional, competent people to deal with. If you're an expatriate with a company that has a tax audit policy like mine, you are encouraged to pay for whatever protection you need that has you covered.


bawa said...

2 questions: 1) Will the IRS in the US also provide people, free, to do your tax-return, by previous appontiment. 2) Will banks provide this service free to their customers?

Just asking because for most people with normal jobs, i.e. a regular salary plus investments, saving plans, and house ownership will use either of these 2 to file their returns.

Just curious to know how it works elsewhere.

Piaw Na said...

No, the U.S. does not provide free tax returns. There was a proposal to do it, but tax software firms like Intuit successfully lobbied against it.

Unknown said...

Don't know if you'll see this because the blog item was a month ago... But anyway, I'm glad your experience with the folks at TaxResources has been much better than mine. Here's my story, though, as a tale of caution.

I got audited because of a bug in Turbotax. Sold some ESPP shares, and thru a fluke had no capital gains or loss; it balanced exactly. The way it usually works with the phony "fair market value" prices used in the formulas, even if you do a same-day sale you'll end up with a small gain or loss. Mine came out to be 0. That's fine, but due to a bug in the program TurboTax didn't put the amount of the sale in Schedule D. This triggered an audit because the IRS computers match up the gross sales reported on your schedule D with what brokers tell them. Since my sale didn't appear on schedule D, IRS thought I was evading income.

Ok, that's what our friends at TaxResources are for, right? Well I got some guy who was just totally incompetent!! First he says "gee, you owe taxes on this like the IRS says". The IRS, since it doesn't know your basis, estimates it to be 0 so you get a tax bill as if the entire sale was a profit. This response from TaxAudit, mind you, was after I had sent in all my broker 1099-B forms and broker sales receipts. The guy either never looked at them, or didn't understand what he saw. Not very comforting either way.

After I explain it to him, he says "let me take another look". He calls back a few days later, thinks now I have a big refund coming! Somehow he thought I was entitled to a refund of the tax witheld from my W2 for the bargain element gain of the sale. No, that's not right either...

In the end, all TaxAudit was to me was a way to communicate with the IRS without writing them directly. I had to explain the tax rules to this guy every step of the way, he was that clueless. And supposedly he's a "tax pro".

Jalpari said...

I would like to know how MikeMac resolved his issue. I am in a similiar circumstance currently. Thanks. April 2009.

Pagenotfound said...

I used Tax Resources as well. The problem is there's no way to evaluate them unless you're audited, which thankfully is quite rare. They make their money off of people that have no idea of the quality of their service.

Well, I was audited and I had Tax Resources. They were fairly good about getting me to an accountant and they didn't charge me anything, but... the accountant they used was terrible and they had no interest in offering me a better one. He almost succeeded in getting my entire business disallowed!

When I told them about this unfortunate turn of events, they wouldn't let me bring in my own accountant, but suggested I use one of their in house higher level accountants. He was not only a bad accountant, but he also was unreachable. Over a period of 4 months, I tried to set up a phone call and he actually refused the entire time!

I finally dropped them and went with my accountant. She charges plenty, but at least she won't get my business disallowed. In one meeting with the auditor, she found out that 1) the Tax Resources representative hadn't even managed to convey what I do for a living and 2) the auditor just wanted someone clear to speak with and really didn't want to disallow my business.

So, I'd highly recommend staying away from Tax Resources. My experience was terrible.

Unknown said...

My experience was also nightmarish. I've never been audited and always do my own taxes, very attentive to detail. I got the notice in the mail and got in touch with Tax Resources. I sent them all of the information they requested in a matter of days. The guy I dealt with kept constantly calming me down, telling me that this will be over really soon, not to worry. Well, it's been 10 months and the IRS keeps coming back with questions. Tax Resources had done a horrible job responding to them. They will not pick up the phone and call the IRS service center - they limit themselves to writing and mailing letters. Now, facing trial, yes, TRIAL in 90 days, I just decided to dump them and go for a real Tax Attorney, who will charge me an arm and a leg, but will get the issue resolved. Tax Resources is wasted time and money. I will be filing a complaint with the BBB and potentially sue them so they pay for my Tax Attorney's fees and interest accrued while they did nothing. Please stay away from Tax Resources.

Unknown said...

This individual received great audit representation from TaxResources. He is unhappy with the time the IRS has been taking on his case, and so are we. This is a systemic problem within the IRS. While we do not represent taxpayers in U.S. Tax Court, we do represent them in pre-trial appeals, which is where these issues are settled. This individual does not need a tax attorney; our representatives routinely resolve cases at this level for cases just like his. If this individual would allow us to continue to serve him we would be able to resolve his case properly. A 3/24/11press release from the Treasury Inspector General for Tax Administration (TIGTA) specifically addresses the issue of IRS delays and how IRS employees are not responding to calls or entering information into the systems in a timely manner.

Unknown said...

Two excerpts from the February 28th, 2011 TIGTA report referenced in the 3/24/11 press release provide details of the IRS response problem:

From page 2 of “Progress Has Been Made to Reengineer the Examination Program, but Additional Improvements Are Needed to Reduce Taxpayer Burden:

"In the 2008 IRS Oversight Board (hereafter referred to as the Board) Annual Report to Congress, practitioners expressed concern about the increased number of Program examinations and the extraordinary amount of time required to reach a final resolution. In addition, practitioners shared that the IRS did not designate, in the various letters, an employee who could be contacted to further define the issues or answer taxpayer questions. The current process requires taxpayers to call the number listed on letters and leave a voice mail message. Practitioners stated IRS employees are not responding to these calls and suggested a telephone help line for taxpayers to call when they have questions."

From page 8:
"We selected a judgmental sample of 24 default cases after receiving concerns that Program employees were not following procedures requiring them to consider taxpayer correspondence prior to closing the cases. Our results showed for 17 of the cases, Program employees did not consider the taxpayers’ correspondence prior to closing the case. In addition, for 10 (59 percent) of the 17 cases, the taxpayers’ correspondence was not input to the Integrated Data Retrieval System and/or the Correspondence Examination Automation Support System within the required time period to alert Program employees that correspondence had been received. This situation was attributed to Program employees storing taxpayer correspondence on shelves instead of entering the information in the computer systems. When correspondence is not timely entered into the systems, IRS employees who work the Toll-Free telephone lines cannot advise taxpayers when they call that their correspondence has been received and is being considered. In addition, Program employees are unable to consider the taxpayer’s correspondence because the computer systems have no record of the correspondence being received. Our analyses showed that taxpayer correspondence was stored on the shelves from 13 to 822 days prior to closing. Shelving the correspondence resulted in a backlog of work that employees could not process until Program resources were allocated to enter the correspondence in the computer systems."