The shrewdest tax adviser (preparer, practitioner, etc.) is the one who can minimize your overall expenditures for taxes (your tax bill plus his bill plus any expenses connected with audits, etc.).
Finding the best tax adviser for you is a search for a marriage of true minds. The first requirement is that your tax professional offer the services you need. Then, in addition to being prompt, courteous, diligent, organized, thorough, and well versed in new developments, the best tax adviser will be inquisitive, innovative, and sensitive to your situation, temperament, and outlook.
The relationship will be personal as well as professional, so plan to devote as much time and effort as necessary. It will pay off. The most effective procedure is to first solicit recommendations and referrals from friends and business acquaintances whose business acumen you respect, and to follow up with in-depth interviews.
Here’s a checklist of points to consider.
• Technical competence. Is this person able to field most of your questions with ease and confidence? If he has to grope for answers or look everything up in a book, you can conclude that knowledge is weak in areas of importance to you. If, on the other hand, you find yourself being told about new developments in tax laws in your areas of interest, consider this a strongly positive indication.
• Organization and interview depth. Does this professional provide an organized worksheet prior to the interview to help you gather your materials effectively and efficiently? Offer advice on record-keeping procedures that speeds and clarifies your work together? Go through your checkbook register, discuss your investments with you, pore through your records and receipts for overlooked deductions?
• Comprehensive analysis. In the initial interview, a top-notch tax adviser will do all of the following: Review all your financial activities for their tax impact; review your three prior years’ returns looking for tax breaks you might have missed; spend time discussing ways to cut your tax bill for the coming year. The only way to save on taxes is by year-round planning. This is what you pay a tax adviser for. If your adviser isn’t inclined to probe, ask questions, and offer advice, you should definitely consider a change. Filling in the forms is something you can learn to do yourself.
• Audit compatibility. A vital point. While we would all love to pay the lowest possibletax bill and never be audited, the fact is that to save tax dollars, you must take aggressive positions on your financial dealings—which makes it much more likely your returns are going to be audited. If you want to cut your audit risk, you must take a more conservative approach. You can’t have it both ways. What’s important is that you and your adviser agree on your audit tolerance.
• Audit representation. Will this professional represent you at an audit? Will there be an extra fee for this? Will he be able to strongly argue the positions you took on your return, especially where the tax law isn’t clear?
• Support network. Is the adviser in question a member of a firm that includes resident specialist/experts, attorneys, accountants? Such support personnel provide more comprehensive service.
• Silent partner. Even the shrewdest tax adviser is only as strong as his silent partner—the client. To get the most from your tax advice, you must take an active role—the more active the better. If you are careful to bring to your adviser’s attention any potential out-of-the-way deductions, present your records in an organized way, make sure records are complete at interview time, keep your expert informed about changes in essential personal and financial matters, and make your own tax education an ongoing concern, your relationship with any tax adviser you choose will be that much more fruitful.