Can Technology Replace Us?
The speed at which technology is advancing is impacting every industry. This is especially the case in the healthcare, IT, education and finance sectors. While the goal of these technologies is generally to make work easier and more enjoyable, there are fears that certain professions like proofreaders, customer experience representatives and tax preparers might become obsolete.
Are these fears warranted in the case of tax preparers? Possibly, however, tax preparation is a career that is actually on the rise and brings a necessary and welcome service to the community. According to the U.S. Bureau of Labor Statistics, there are 83,190 tax preparers in the United States, a number that rose 3% in the last year.
What does a tax preparer do?
Most tax preparers prepare, file or assist with general tax forms. Beyond these basic services, a tax preparer can also defend a taxpayer in the event of an IRS audit or tax court issues. However, the extent of what a tax preparer can do is based on their credentials and whether they have representation rights.
The basic IRS requirement for all paid tax preparers is to pass the suitability check and be issued a preparer tax identification number (PTIN). Once you start talking about the work of an enrolled agent, there will be additional requirements, such as a state license or an electronic filing identification number (EFIN). To gain representation rights, you need to be an enrolled agent, CPA or attorney.
In a way, tax preparers are asked to serve two masters— their clients and the IRS. They must assist their clients in complying with state and federal tax codes, while simultaneously minimizing the client’s tax burden. While they are hired to serve their client, they must also diligently remember their obligation to the IRS and not break any laws or help others file a fraudulent return.
Keeping up with tax law changes is another imperative task for both new and experienced preparers. As a result, most preparers invest some time each day checking on any IRS changes, technical corrections or any other state or local changes that might impact their business.
Since the IRS and state governments are involved, taxes are not something consumers can approach lightly. Anytime there is a possibility of financial losses or breaking the law, it is best to invoke the help of a professional.
Is technology a competitor for tax preparers?
According to the IRS, slightly less than half of all e-filed tax returns are self-prepared; paid tax preparers complete the rest. Tax software can make it easier for people to prepare their own taxes, but in most situations it's wise to bring in a professional. The growth of cloud computing entails the storage of data and information on a remote server and not a hard drive. This makes accessing and sharing the data to any location much easier. Software applications are now available to allow consumers to save their accounting information to the cloud.
While this can simplify a tax preparer’s job, it will only help with the tedious tasks, leaving the more complex and important thought processing to be handled by an accountant with expertise as a tax preparer.
So, are these fears warranted or not for tax preparers?
Tax preparers won’t become obsolete anytime soon. They will remain a vital for individuals and businesses for many years to come. Until there is a technology that can help make business-driven decisions, accountants and tax professionals have nothing to worry about.
To date, recent technologies in robotic process automation are taking small repetitive tasks out of human hands, but human minds are still needed to gather and apply insight from data analysis. Accounting firms or departments can focus on more important tasks, like analyzing and interpreting data and making well-informed business decisions. Computers can work the numbers but are not yet able to make the decisions.
Using updated technology or software as a resource is necessary to keep up with your competition, but making sure you are always covered is vital. Tax preparer professional liability insurance safeguards against financial damages arising from an alleged mistake that you make while rendering professional tax preparation services. In plain language, it helps protect you when you make a mistake or forget to do something important that ends up hurting a client. It also safeguards your business and personal assets against the excessive costs associated with client litigation and court settlements.
Tax preparer professional liability insurance policies from 360 Coverage Pros are specifically designed to protect tax preparers, bookkeepers, accountants, CPAs, enrolled agents, annual filing season program participants and PTIN holders in multiple areas of practice including, but not limited to:
- Tax work
- Bookkeeping, write-ups, payroll
- General business planning
- Reviews, compilations, audits work for private companies and individuals (up to 25% of total services)
- Personal financial planning or investment advisory services (up to 25% of total services)
In addition to our professional liability coverage, we offer the following at no additional charge:
- Disciplinary or license/regulatory proceeding expense
- Subpoena assistance
- Defendants expense
- Crime and dishonesty liability
- Monthly payment options
- Painless, automatic renewal process
For more information or to schedule a free consultation, please visit 360coveragepros.com/professional-liability-insurance/tax-preparers.
