Groundbreaking: McFarland-CPA’s new Tax Organizer—Coming Soon!


Tax Organizer Coming Soon!

We are working feverishly on the Tax Organizer!

Like our attempt at a clickbait-style headline?

As part of McFarland-CPA’s ongoing commitment to delivering the best value, in the quickest way, at a cutting edge price, we are putting the finishing touches on our online tax organizer.  Most tax pros employ only one of the few options available for working with clients and price their services accordingly. We have striven to take the best aspects of each of these and synthesize them into a new way of doing business.

What are the options:

  • An in-office, face-to-face interview
  • An online file upload with follow up interactions via voice, email, or, rarely, online chat
  • Email a form (most common) and hope clients will fill it out prior to an appointment to drop off the resulting packet

Each of these alone has pros and cons and we’ll touch on the major points of each. For the first option, the most expensive one, this is like getting your hair done. It’s a custom job and takes up a lot of the pros time. You should expect to pay a lot for this approach if you are dealing with a trained professional. H&R Block and many other store-front franchise operations drop you in a cubicle to be interviewed by an entry-level staffer following a set script. That approach saves on costs but obviously you’ll lose the benefit of years of experience and training. Also, you should expect a lot of back and forth, which many people find frustrating, in order to develop a complete set of information for your return.

In the second option, the one followed by the early adventurers wandering out into the wilds of the internet, you could expect, and should still expect, a lot of back and forth. There was, and is, almost no way to make that work without the structure of the third option.

The tax organizer questionnaire is the solution to the unstructured problem of option two and is really the script for the entry level folks in some implementations of option one (remember H&R Block?). This option forces you to look through a sixteen page questionnaire (yep, we printed out the one the AICPA provides tax practitioners and it was 16 pages long) selecting what applies and what doesn’t. It’s a one-size-fits-all tool.

Our approach, which keeps costs to a minimum while providing a full CPA review of your situation, is a hybrid of all of these that allows us to start together on your adventure with tax-advantaged wealth accumulation and financial independence. We use an online tax organizer engineered to guide you through only the relevant parts of the organizer. In this way, we are similar to tax software. The information you provide through the organizer will be evaluated for reasonableness and probable completeness and then we’ll prepare the correct forms for you. Some items have multiple options and we have the experience to think through those and come up with the best solution for you. Software just doesn’t do that (unless you believe that Watson is actually evaluating your tax return using fuzzy logic).

We anticipate sending you the link to the online organizer later this week which will put us all in an excellent position in the countdown to April 17 (that’s the filing deadline for this year without an extension). If you want your return prepared and submitted later in the year, the organizer will provide you that option.

As always, we, the members of McFarland-CPA, want to express our gratitude for your patronage and can’t wait to get started on this journey with you! We think you will be much better off for having known us as the years go by and are thankful for the opportunity of serving your financial needs.

The Fiduciary Rule is Dead

The Fiduciary Rule is Dead?

Summary: The Fiduciary Rule, intended to eliminate predatory practices that have been costing retirement investors billions in lost returns, will not take effect on April 10 as previously scheduled.  Its implementation is delayed for 180 days and analysts assess that the Department of Labor will not implement it then, either.  A related executive order directs the Treasury Department to review regulations that inhibit Americans making, ” . . . independent financial decisions and informed choices.”

Fiduciary Rule Delayed 180 Days

The Administration directed the Department of Labor to cease work on implementing the Fiduciary Rule.  The rule would have taken effect April 10, 2017, but its future is now doubtful, given a 180 day delay to assess its impacts.  In a nutshell, licensed and registered financial advisers (financial product salespersons or FPS) engaging with either institutional or individual retirement plans would have been required to recommend investments that were in your best interests rather than applying the “roughly suitable” rule currently providing safe harbor in the industry.  This is a setback for retirement investors and increases the importance of being an informed investor before discussing any particular investments with your FPS.  The rule was not to have applied to investments in general, just to retirement plan investments. As a side note, McFarland-CPA does not recommend specific acquisitions of named products to its clients, instead providing an analytical framework from which to interact with those who do. We think education and information is the key to a satisfactory relationship with any salesperson.

FPS’s Interests Not Aligned With Yours

Up till now, FPSs could be compensated in many different ways and only a fee-only FPS could be assumed to really be in your court. Cases of “churning,” when a broker simply buys and sells in your retirement account in order to generate transaction fees, are not hard to find.  The sales of front-loaded funds and insurance-like investment products were other sources of FPSs’ revenue that did not necessarily align the FPSs’ interests, as the advisor, with yours, as their client. In another example, we have seen many clients who did not actually qualify as sophisticated investors (a term with pretty good common law definition) being taken advantage of by boiler room operations selling doubtful investments in shady limited liability corporations. The LLCs then go bankrupt with our clients losing everything. It is uncertain whether the final result will curtail these types of predatory practices but they clearly fall within the topic generally.

Fiduciary Duty Was Key Reason for Change

The previous administration had sought to force FPSs to be their retirement clients’ advocates rather than arms length adversaries as is now the case in some cases. Without fundamental changes to the industry, after the rule’s implementation, these sales professionals would have been open to slam-dunk lawsuits unless they could prove they actually were acting as fiduciaries. At least that was the scuttlebutt in the industry’s backchannels. The fiduciary duty is a bar that many would not have been able to meet and still remain in the industry.  Converting to a fee-only professional basis, as is common with attorneys, CPAs, and other professionals, would not have been possible for many given the saturation already existing in the market. There is a notable hesitance for consumers to leave indirectly-compensated brokers for fee-only professionals.  We’re ok with that, so long as it’s clear that the consumer understands the person on the other end of the phone has an agenda that isn’t necessarily aligned with your welfare. If your physician might be providing you with advice that wasn’t in your interest, how long would you retain her or him?

Assessment:  Maintained Vigilance and Consumer Education Will be Key

With the delay and possible cancellation of this rule, those most vulnerable to predatory practices will need the increased vigilant support of their confidants.  We will continue to emphasize this part of our information-only practice and look forward to a healthy discussion in the forums.  Advocates for the Obama administration rule contended that investor losses absent the rule reached $17 billion annually.

Investor Losses and the Fiduciary Rule

Obama Administration Policy Fact Sheet

DOL Fiduciary Rule as Proposed May Not Stop Investor Losses as Claimed