Taxing RelationshipsAmy Feldman and Joan Caplin
As tax time nears, people and their accountants approach each other warily. When clients lay bare their financial secrets—telling their accountants about investment gains, job losses, divorces, and the like—tax pros become more like financial shrinks. That closeness, combined with the general anxieties of tax time, often brings strong emotions and fraught issues to the surface. Anger? Check. Misplaced boundaries? Check. Fear? Check. Greed? Check.
One sign of accountant-client angst: Plug the words "how to fire your accountant" into Google (GOOG), and 555,000 hits come up. Procrastinators turn over piles of unsorted documents to their accountants at the last minute—and then get upset when their tax preparers file an extension. They get angry when their accountants nix writeoffs they're convinced they deserve. Meanwhile, the 900,000 to 1.2 million tax preparers—including CPAs, attorneys and others—who fill out 86.6 million tax returns, according to IRS data, vary wildly in terms of the quality of advice, willingness to test the limits of the rules, and the way they interact with clients.
People often stumble randomly into a relationship with their accountant. Robbie Bell, a 64-year-old Realtor and radio talk-show host in Miami, and her accountant, Gerri Lazarre, 33, have formed a quasi-mother/daughter relationship. They met five years ago at a social event, when Bell admired Lazarre's striking 3-inch heels. Since then, Bell has urged Lazarre to have more fun with her wardrobe, see a doctor about sinus troubles, and do more networking to expand her accounting business, TriMerge Consulting Group. But when it comes to tax time, Bell is not an easy client. She insists on keeping track of receipts by taping little pieces of paper together rather than using a computer program, and she's consistently late in getting information to Lazarre. Though tax season is in full swing for 2009 returns, Bell just last month got her 2008 records to Lazarre. "I love her to death, but she's always a year behind. I hate it. I have to babysit her," says Lazarre. Bell says she dreads their tax-time huddles. "It's like the Inquisition. I feel like I am in the room with the single light bulb dangling over my head."
A different dynamic was at play in the case of an elderly client of John Brandt, a 54-year-old CPA in New Berlin, Wis. The client, 78, had recently installed new energy-efficient windows in a rental property and wanted to get a big deduction for doing so. Unfortunately, Brandt says, the windows were considered a capital improvement for tax purposes and needed to be depreciated over 27½ years. The two had a heated discussion. "She was obstinate that she wanted to take this deduction and that it was unreasonable for the rules not to allow it since [the benefit] would extend beyond her life expectancy," says Brandt, who stood his ground.
DIVORCES AND RETURNS
Many taxpayers go to an accountant who's a family friend or who lives nearby. Sandy Finklin's accountant, for both personal and business filings, is a former college buddy, Crystal Arrington. Finklin, 31, chief executive of Miami Beach-based Divine Purpose Associates, which represents Christian comedians, artists, models, and writers, says Arrington pushes her to be more thrifty and to clip coupons. "She comments on my spending because she helps me with my budget," Finklin says. "I eat out a lot, and she told me I have to cut down on that. I was embarrassed. Initially I felt like she was in my business too much."
More complicated is the case of Kristin Lavieri, a 45-year-old tax preparer at Weinstein & Anastasio, in Hamden, Conn. Lavieri does taxes for her ex-husband and his wife, and her soon-to-be (second) ex-husband. She barters with her first husband, a carpenter, trading tax prep for carpentry work. Lavieri says she chides him when he's late with paperwork, telling him "you've screwed up my schedule." Not surprisingly, there also is angst in the tax relationship with her soon-to-be ex-husband. When she told him what he needed to do to prepare for tax time, she says, he didn't do it. "He wouldn't listen, and now he has a big bill and he's freaking out," she says. Dan Brennan, the soon-to-be-ex, says: "I don't listen. I've learned how to turn her off."
As Apr. 15 approaches, there is one bright spot this year. Many investors have capital losses stockpiled that can offset capital gains. "Even though it's not in their control, CPAs are having a better relationship with their clients now," says Joan Crain, wealth strategist at BNY Mellon Wealth Management in Ft. Lauderdale, Fla. "They're getting pleasant surprises."