Tax preparation businesses keep up with the latest tax rules

For area tax professionals like Mike Martin, experience may be the best teacher when it comes to understanding the lively practice of tax preparation.

Martin launched Independence-based Mike Martin & Associates Inc. after working nearly two decades as an executive for H&R Block Inc.

Despite competition from new tax preparers and do-it-yourself software, Martin and his staff typically realize a steady increase in the number of new faces that come in every year for tax services.

“We usually experience an 18 to 20 percent increase in new clients, which replaces the number that pass away or move away,” Martin said. “This year, we’re already seeing a 22 to 23 percent clip in new business.”

Numerous Kansas City accounting firms and bookkeeping services posted significant increases in the number of individual and business returns they completed in 2007, compared with the previous year.

Herfordt Shelton Mertens & Couch PC, which operates offices in Independence and Mission, completed 3,506 returns last year, compared with 2,912 in 2006.

The Tax Shoppe, based in Raytown, produced nearly 3,330 returns in 2007, an increase of about 30 percent from the previous year’s total.

Filers usually depend on advice from accountants and tax professionals who are able to translate the most recent wrinkles to the tax code, especially ones covering deductions.

More than 57 million electronic filings were completed by tax industry pros last year, but the number could be even higher this season if taxpayer inquiries are any indication.

An increasing number of individual filers want to know about rebates tied to the federal government’s economic stimulus package. It’s money that may benefit taxpayers who don’t have a filing requirement, said Michael Devine, an Internal Revenue Service spokesman in St. Louis.

Simply completing a filing by the April deadline will help ensure some sort of payment to filers limited to Social Security, military disability, railroad retirement or outside investment income, Devine said.

Even if their income may be too high to qualify for stimulus payments, callers often want to know how the package may affect their children or other family members, said John Keech, president of Higdon & Hale CPAs in Overland Park.

The Mortgage Forgiveness Debt Relief Act of 2007, a law designed to provide tax relief money to people whose mortgages were foreclosed, has drawn few inquiries, Keech said.

Nearly 23 million taxpayers prepared their own returns electronically last year. Many base their filing decisions on information from the IRS, including its Web site at www.irs.gov.

Others scour new media sites for information.

For example, a recent YouTube video shows a pair of TurboTax software workers giving a step-by-step guide to preparing this year’s return.

Martin said that he has given annual seminars for tax preparers for more than 20 years. The classes help prepare him and his staff for the tax season every year, he said.

“The teacher learns more than the student,” Martin said. “It’s a tough audience. These guys are professional in their own right.”

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Business Financial Services

Tax preparation businesses keep up with the latest tax rules