Up For Review Is your accountant helping your business---or upping your tax bill? Take a close look.

With the tax-filing season in full swing, it makes sense to takea good, hard look at your accountant and the work he or she hasdone for you over the past year. Is your accountant helping yousave money? Is your business better off as a result of youraccountant's recommendations? Don't let an old, familiarrelationship lull you into a false sense of security.

Scrutinize all the services your accountant provides. Are yougetting your money's worth? Perhaps your company has grownsignificantly from its start-up days and you now need a largeraccounting firm that can provide more services than a one-ortwo-person shop.

When you're first starting a business, you typically needfinancial guidance with your daily operations. Once established,however, a business needs a tax professional who can perform awider range of services, such as offering assistance in locatingfinancing or upgrading your software programs.

To determine how your accountant stacks up, ask yourself thesequestions:

1. Can you easily reach your accountant whenyou need to speak with him or her? You should get quick responsesto your calls, says Paul Thrasher, a CPA with the Alexandria,Virginia, accounting firm Halt, Thrasher & Buzas. If you haveto wait several days to speak with your accountant, he or she is indanger of getting a failing grade.

2. Has your accountant given you guidance onwhich tax records to keep and how to organize them? Accountantswith their clients' best interests in mind take the time toprovide effective ways to organize your business records. In somecases, he or she may ask you to save tax-related information on acomputer disk; that information can be downloaded into theaccountant's tax return software. Maintaining organized taxrecords also means you'll save money you would have had to payyour accountant for organizing the confusion.

"A good tax professional should be able to [tell you] howyou can automate your record-keeping so you can very seamlessly getyour records into his or her system," says Susan Jacksack, asmall-business analyst with CCH Inc., a provider of legal, tax andbusiness information in Riverwoods, Illinois.

3. Are you satisfied with youraccountant's ability to stay up-to-date on tax changes? Youwant to be sure your tax professional has a thorough understandingof all the latest tax law changes and their impact on yourbusiness. If your accountant provides you with a newsletter andoffers periodic seminars on tax law changes, this is a goodindication he or she is on top of things, says Thrasher.

4. Is your accountant doing everythingpossible within the law to lower your tax bill and offer youmoney-saving tax strategies? A good accountant continuallyvolunteers possible strategies, especially with all the changestaking effect as a result of the Taxpayer Relief Act of 1997."You shouldn't have to pull possible strategies out ofhim," says Jacksack.

For example, under the new law, there are a lot of tax breaksthat depend on your income level and involve some shifting ofincome from one year to the next so you're eligible to takecertain deductions. Your accountant should be offering you adviceright now on how to take advantage of these tax breaks.

5. When your accountant offers advice and taxstrategies, do you feel comfortable with them? Youraccountant's philosophy should match your own. For example, ishe or she always suggesting aggressive strategies to minimize thetax burden, even if it means being peppered with questions from theIRS? Conversely, you may feel your accountant is not aggressiveenough and is ignoring deductions you may be able to take. If youfind you're knocking heads too often, your accountant isfailing the test.

6. Have you requested the results of youraccounting firm's peer review report, which is supposed to bedone every three years by an outside accounting firm? When firmsare willing to share the results of this audit with you, theyusually don't have anything to hide, says Thrasher. On theother hand, he adds, "a lot of hemming and hawing may indicatea problem."

7. If you use a large accounting firm, do youknow where it ranks on the local business journal's most recentlist of the top 100 accounting firms in your area?While these rankings are done according to the size of the firm, ifyours is on the list, it indicates you are dealing with a qualityfirm, says Thrasher.

8. Do you feel the accounting fees you payare what they should be? Take a close look at what you'repaying for accounting services and whether you're getting yourmoney's worth. Of particular concern are accounting fees thatgo up every year, without fail. If this is happening to you, askyourself whether the additional fees you pay every year are worthit.

9. Does your accounting firm assign you a newstaff accountant fairly frequently? If that's the case, watchout. This kind of revolving door means trouble for your businessbecause it takes a fair amount of time to get a new CPA acclimatedto the way you do things. In addition, it may mean your accountingfirm is not being managed properly.

10. Is your accountant familiar enough withyour type and size of business? Your accountant should be workingwith a fair percentage of businesses the same size as yours, saysJacksack. "The more clients they have like yours, the morehelpful they'll be to you because they can tell you how yourbusiness is doing vis-a-vis the other ones they deal with,"she says.

While industry knowledge is important, don't make more of itthan is necessary, advises Thrasher. Raw ability often outweighsfactors such as knowing a specific industry, he says. There areexceptions, however. Thrasher points out that if your businessinvolves government contracting, you need an accountant who knowsthose particular accounting requirements. In addition, Jacksacknotes that retailers need accountants who are familiar with the taxrules and requirements concerning inventory.

If, after answering these questions, you decide your accountantdoesn't measure up, discuss your concerns with him or her. Giveyour accountant some time to work on areas that need improvementand keep the lines of communication open. In today's highlycompetitive marketplace, accounting firms, like most businesses,are making every effort to keep clients. Let this work to youradvantage and make sure you get the most for your money.

Joan Szabo is a writer in McLean, Virginia, who has reportedon tax issues for more than 12 years.

The Payoff

For the past several months, the IRS has been tirelessly workingto make itself more taxpayer-responsive. Now we're starting tosee the results of those efforts.

Following recent Senate Finance Committee hearings on the IRSand taxpayer abuses (see "Tax Talk," January), aninternal audit was launched in one district office concerning theIRS' revenue collection procedures. The findings, presented tothe Senate panel in December, point out that IRS managers'excessive focus on collecting money from taxpayers led workers inthe Arkansas-Oklahoma district office to violate IRS procedures inseizing taxpayers' houses and other assets.

When he released the findings, new IRS commissioner Charles O.Rossotti noted that he was "concerned about the number ofquestionable procedural violations that may have occurred in thecases that were reviewed. I am especially troubled about theemphasis placed on improving collection statistics without an equalemphasis on customer service and the safeguarding of taxpayerrights."

In response to the findings, Rossotti announced several stepsthe IRS would take to tighten procedures and require additionalhigh-level review before IRS agents seize homes. For example, if ataxpayer is told that his or her property is going to be seized,and the taxpayer informs a revenue officer that such an action willcause hardship, the officer is required to refer the case to thelocal Taxpayer Advocate for possible relief.

The agency is also revising Publication 594, "Understandingthe Collection Process," so it's more useful to taxpayerswho must deal with IRS collection personnel. The IRS includes thepublication in all notices concerning IRS plans to seize ataxpayer's property or other assets.

The revised publication will include a detachable Form 911,"Application for Taxpayer Assistance Order." This formallows taxpayers to request relief from the Taxpayer Advocate if alevy will cause a hardship. Providing taxpayers with this form willensure that they are able to exercise their rights to requestTaxpayer Advocate assistance, the IRS maintains.

Treasury Secretary Robert E. Rubin also registered his concernabout the audit's results, saying Rossotti's steps totighten procedures "are an appropriate first response to thefindings."

Contact Sources

CCH Inc., 2700 Lake Cook Rd., Riverwoods, IL 60015,http://www.toolkit.cch.com

Halt, Thrasher & Buzas, 99 Canal Center Plaza, #230,Alexandria, VA 22314, (703) 836-1350