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Business & Tech

Meet Tom Scanlon, CPA

CPA says one of the most common mistakes is failure to file a return.

Timothy Becker: Before we get started, what are the most common mistakes that you see taxpayers making?

Tom Scanlon: The one that creates the most correspondence with the IRS is estimated tax payments. Simple things: did you pay them on time, did you keep a record of that payment? Did you make a transposition error when recording the number? If you did not pay on time you may be subject to penalty and interest.

Another big mistake is failure to file a return. The IRS will find you within two years.

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Timothy Becker: What did you need to do to become a Certified Public Accountant and how do you maintain that designation?

Tom Scanlon:  To become a CPA I needed a four year degree in accounting, two years of experience in the field of public accounting, and needed to pass a state exam and pay $450 for a state license. To retain the designation you need to take forty hours of continuing education per year including an ethics component. If you issue financial statements you also must undergo a peer review every three years.

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Timothy Becker: How long has your firm been in Manchester? How long have you yourself been a CPA? And how many employees do you have here in Manchester?

Tom Scanlon: Borgida & Company has been in Manchester for 46 years. I’ve been a CPA for over 30 years. We employ 10 at our Manchester office.

Timothy Becker: I understand that you work extra hours this time of year.

Tom Scanlon: It’s north of seventy hours a week. A 12-hour day is normal including weekends. The farmer picks the harvest when it is ripe, not when he gets around to it.

Timothy Becker: I understand that many of your clients are small business owners. Without breaching any confidentiality, what trends are you seeing?

Tom Scanlon: It’s mixed. The strong are getting stronger, the weak are getting weaker. The strong tend to be niche businesses. Most business owners have tightened their belts. They are in survival mode.

Timothy Becker: Do you have some tax tips that you can pass along to the average filer?

Tom Scanlon: The energy tax credit is a dollar-for-dollar credit against their tax. A lot of people have not moved and decided to fix what they have. Anything that qualifies as an Energy Star improvement will qualify.

The college education credit and the lifetime learning credit are other dollar-for-dollar tax credits. There are some income restrictions on these credits. The childcare credit also is available as long as you don’t have an employer dependent care account.

The self-employed have another cool tool this year only. They can deduct their health insurance premiums against their social security tax of 15.3 %.

Timothy Becker: Some tax preparation firms offer instant refunds. What are your thoughts on that practice?

Tom Scanlon: They are horrible. They are called RALs or refund anticipation loans. They should be outlawed. If you run the math, the interest rates they were charging you are higher than a loan shark. They are feeding on people who can’t afford it. It’s just wrong. The government regulates credit card rates, but doesn’t regulate this practice.

Timothy Becker: What do you think about tax preparation software?

Tom Scanlon: I think tax preparation software is a good tool that gets better and better every year. It makes a lot of sense for the mainstream of people that have a straightforward return. If you are somewhat computer savvy and don’t have a complicated tax situation, it is a tool you should use.

Timothy Becker: What is your advise to people who owe money to the IRS and can’t afford to pay it?

Tom Scanlon: My advice is to deal with it and not put it aside. By dealing with it I mean file your return. The IRS has some good mechanisms for taxpayers who are in a financial bind. I need to give them some credit recently for being a bit kinder and gentler with people. They have a system in place for repayment agreements for those people that have a debt of less than 25 thousand dollars. Sadly they charge you money for that. There is a $105 fee to sign up.

Timothy Becker: Are there interest and penalties also attached?

Tom Scanlon: Yes. If you can borrow the money from another source you are better off. However the IRS will work with you. You must keep current with your tax obligation going forward. The self-employed must pay their quarterly estimates on time to keep the agreement in force.

Timothy Becker: When should you consider hiring a professional tax preparer like yourself?

Tom Scanlon: Most people with straightforward returns can handle the job themselves with software or by hand. When you have a more sophisticated tax situation, you should consider a professional. If you have a number of security transactions, rental property, or you are a home based business owner, a software package won’t give you judgment. We offer advice based on years of experience. We also will represent you in the event of an audit by the IRS.

Timothy Becker: What do you say to the procrastinators who show up on April 14?

Tom Scanlon: See you in August. We are doing an extension. An extension is automatically granted. You only extend the time to file the return however, make sure that the tax you owe is paid.

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