Sunday, March 29, 2009

Two Types of Clients

The workload of returns is beginning to pick up. My tasks now mainly entail entering data in the tax program, Pro Systems fx, for the supervisor, or actually completing returns myself. Mostly I am piecing through hundreds of documents at a time, trying to get things organized. Soon I'll be taught how to file extensions!

I've come to find that there are generally two kinds of tax return clients, with my preference being neither toward one nor the other. 1st) The client who turns in very few documents. 2nd) The client who turns in every piece of paper in their house.

* * *

With the 1st type of client, the preparer has an easier time organizing and compiling the return, but s/he must wait a long time for the client to send in every last document. How I've learned to deal with clients like this: compile as much of the return as possible, and then make a list of missing items; contact the client with the long list of items and request that the documents be faxed/mailed in ASAP; as the documents arrive piece-mail, check them off the list; when every item on the list is checked off, then proceed to finish the return. This way, the preparer (me) only has to see the return twice, and the client is happier because I don't have to bill them as many hours.

If I put each document into the return as I receive it, then I likely have to analyze their whole case again, and that's a waste of time. So while this type of client can be less aggravating to deal with than the 2nd type, his/her return still has to take up space in my filing cabinet for several months. Likewise, the client remains on my mental WIP* list, which can seem to become overloaded at times.

* * *

The 2nd type of client is the one who sends me their entire life on paper. These are the people who can rest assured that every single penny that's legally deductible will make it into their return. What they often don't realize is that when they send their accountant a bunch of good stuff lumped together with a bunch of crap, then the accountant has to sort through it. Sorting takes time. Time equals money. Do the math.

I sometimes get frustrated when a client sends in hundreds of prescription receipts without having counted them first and given me a subtotal. It means that I have to undertake the mundane task of counting them- something that years of accounting coursework is trumped by. The client's tax preparation bill will undoubtedly be higher, but this 2nd type of client can sleep easy at night knowing that they got all their deductions.

By the way, it bothers me when I have to count prescription receipts and it ends up being that the client takes the standard deduction because their itemized deductions weren't high enough.

* * *

Either way, Client 1 or Client 2, both get the peace of mind that their taxes have been done correctly to the fullest extent the preparer was able, given what was turned in. My third grade teacher used to say "Cakes and turkeys get done, people get finished." I say "Cakes, turkeys, and tax returns get done, people get finished." If you peak at this Washington State University web page, you'll be led to believe that my third grade teacher may have incorrectly corrected her students. Now I'm stuck in this rut of finishing things, never simply 'doing' them.

The time has come to sort out which accounting classes I will take in the fall. Tax could be in the mix....

I've stopped numbering my work days- the post titles were too mundane.

*WIP = Work in Process

Sunday, March 15, 2009

Ninth, Tenth, Eleventh, Twelfth, Thirteenth Days of Work

Last week was an intense one. I worked 52 hours during my spring break so that I can take the next week off. I compiled a lot of returns and performed some data entry.

The company I work for provides all its employees with complimentary coffee. I met the person who owns the coffee company last week because he visited our office. I was just heading out to get a sandwich for lunch when this guy opted to take the elevator down with me. Before telling me that he was the coffee guy, he asked me how I like the coffee in the office.... ... I told him I thought it was wonderful! Then he told me who he was, and I was glad that I told him the truth. I found out later that our company would probably get a free box of coffee because of what I told this man in the elevator.

Wednesday, March 4, 2009

Eighth Day of Work

My supervisor handed me a large tome titled Internal Revenue Code, saying, "Here--take this home with you and read it at night before you go to sleep." 'Large' is an understatement for a book that took both arms to carry. The time has come to breath--nay, be the Internal Revenue Code. From here on out, the last thing I'll do before going to sleep each night, and the first thing I'll do upon waking each morning, will be to read the tax code of the United States.

* * *

I spent 10 hours today leafing through page after page of personal documents and inputting their meaning into paper tax forms and tax software. After some thought, I've come to realize that in a given day at this job, I touch probably 2,000 sheets of paper. My hands actually dry out by the end of the day. I was a DJ in high school and I used to joke that I needed to wear gloves to work because the 'scratching' was burning my fingers. Now that I'm in an office environment, that necessity might actually materialize as the semester progresses. The irony.

The highlight of my day was when the managing partner of the firm came directly to me with his personal friend's trust return and asked me to complete it. The pressure was on! In the world of trust returns this was a fairly simple one, but accounting for investments is not easy for a beginner. Trying to calculate Foreign Gross Income was insanity. For someone who'd never calculated an FGI before, though, I figured it out all by myself without asking a soul. I was finished with the return in 75 minutes, had it printed, and delivered for final review, ready to be IRS e-filed.

I got a great sense of satisfaction from this task that I haven't felt in some time. When I work on individual returns, I can always wheel [while sitting in the office chair] over to my supervisor's desk and ask him anything. But, my supervisor had already left for the day when I was assigned the trust return. In a sense, trust was placed in me for this task. At the same time though, what better a way to test an intern's tax competency than to give him a return all his own to complete. This was a trust-building exercise, naturally a pun in and of itself. I had to trust my own instinct and the partner had to trust my limited knowledge base, which had hopefully expanded sufficiently by the time the return was assigned.

I didn't receive any negative feedback on my performance, which as I've come to discover in the tax world, means you did good. In sum, it feels good putting my brain to use to actually earn the money they pay me. I'm happy to be learning a lot.

P.S. I love accounting, don't get me wrong, but just because that first paragraph is written here does not mean that I'm necessarily making a serious commitment to living in the tax zip code.

Sunday, March 1, 2009

Seventh Day of Work

After recovering from my affliction, I put in another long day- 12 hours. I find that at a certain time of day, say 4:00 PM on Saturdays, it gets much easier to do work because all the accountants with kids have already left. Where I'm at, that would be a large part of the firm. A benefit of interning in accounting is that I can generally work extra hours if I like. I am really efficient during the afternoon and evening, so I enjoy leaving a [surprise] heap of finished work on my supervisor's desk for review.

They've sure given me responsibility in a hurry at this firm- and I love it. There's never any downtime, and expectations of me are high. Expectations can be stressful, but this is what makes me an efficient worker.

I began today by exploring the issue of tax accounting related to the Madoff scandal. The stimulus bill of last summer (I believe) extended the Net Operating Loss (NOL) carryback period to 3 years, with the carryforward period remaining at 20 years. So people that lost money with Madoff can correct their prior year returns to recover taxes they paid on either cash flow-generating or phantom income that, in retrospect, wasn't real. I tried asking a fellow accountant to sum up the article I read into a nice, neat ball that is easy to understand. "What's the bottom line? What do we do for clients who are Madoff-victims?"

The answer I got was the following: "It's a gray area... Like most things in accounting, the answer is 'It depends.'" I spazzed. My Intermediate Accounting 1 professor, Sue Marcum, used to say that "It depends" is her favorite answer to all questions accounting-related. I agree.

Tax seems to me like one gigantic gray area. If everything in tax was black and white, then a great many of us would be out of jobs. Making money from the gray area is fine. What excites me, though, is understanding applicable parts of the gray area well enough to save clients more money than their tax preparation bill ends up being. In my opinion, both parties win with the US Treasury being the only loser. Poor treasury. I'm sure if I worked at Treasury I'd be eager to tax people senseless... pshh.. just kidding. Does the US government have feelings? If your tax burden is less because your accountant found either a loophole or a more favorable treatment of certain items, will the government feel sad that it wasn't able to collect more tax? I doubt it.

After the Madoff discussion, I moved on to the fun stuff: tax returns. I performed some small-scale data entry before learning about reporting foreign investment taxes. I was taught which Schedule B form to use in indicating foreign taxes paid on investment income. I also learned the placement of alimony/spousal payments. Hearing that child support payments are not tax deductible got me curious about the specific rules for family-related payments of this kind. When I got home, I spent a fair amount of time checking out Section 215 on the IRS website. This wasn't my first time visiting the IRS website for research purposes. Things I see at work get me curious and interested in particular tax matters, and so I'll usually go and research them myself. Experience is everything in this business, and I'm not going to get anywhere by sitting around. I'm taking an active role in my tax education because this is a serious discipline and I strive to excel in all that I do.

I finished the day with a long return and some categorizing of a client's business expenses.

I'm a meticulous guy, so the adding machine is a personal friend of mine. I wanted an adding machine with the ticker-tape and all as a birthday present when I was 7 years old. I thought the paper feeding was the neatest thing ever. I spent hour after hour over the next few years playing with that machine. I didn't have anything to add, either. I simply enjoyed calculating random numbers and figuring out the functions of the machine. My parents were skeptical of my initial desire for this machine, but they were definitely buying me the refill supplies soon after they gave it to me.