5 Mistakes That Sink New Tax Preparers (And How to Avoid Every One)

After years of working with tax preparers through his law firm, Jason Carr has watched the same five mistakes trip up new preparers again and again. Every one of them is avoidable.

In this episode, Jason walks through the five that do the most damage:

• Skipping the signed engagement letter
• Preparing a return without seeing the source documents
• Promising a refund amount before the return is done
• Not recognizing when a situation is beyond your scope
• Treating tax prep as a four-month seasonal business

If you are building a tax practice and want to protect yourself, keep clients, and avoid the errors that sink new preparers, this episode is your checklist.

Key Takeaways

• Get a signed engagement letter every client, every year: It is your protection in a fee dispute or a disagreement over what you agreed to do. Without it, it is your word against the client's.
• Work from source documents, not from memory: Ask for W-2s, 1099s, receipts, and statements. The IRS Automated Underreporter program compares third-party income data to what was reported on the return, and a mismatch can generate a CP2000 notice proposing additional tax.1
• A CP2000 is not an audit, but it still lands on your client's desk: It is a computer-generated proposal to adjust income, payments, credits, or deductions based on a third-party data mismatch.1 Working from documented information reduces that risk.
• Never promise a refund amount before completing the return: Guessing creates an expectation you may not be able to meet and sets you alongside the tax mills that advertise guaranteed refunds.
• Know your scope: Unfiled returns across multiple years, IRS collection actions like liens and levies, audit notices, and potential criminal exposure call for a licensed professional with representation authority. Referring out protects the client and strengthens your practice.
• Build a year-round practice: Seasonal preparers restart from zero every January. Year-round practitioners compound through quarterly check-ins, added services, and consistent visibility.
  
  

Suggested Episode Timestamps

00:00: Why the same five mistakes keep showing up

00:45: Mistake 1: No signed engagement letter

02:10: Mistake 2: Preparing a return without source documents

04:05: Mistake 3: Promising a refund amount in advance

05:45: Mistake 4: Not knowing when a situation is beyond your scope

07:40: Mistake 5: Treating this as a seasonal business

09:15: The five recapped

09:55: How the Blueprint Program covers all five

10:30: Sign-off

Resources Mentioned

• MuseSpring: https://musespring.com
• Tax Business Blueprint Program: https://musespring.com
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Transcript

SPEAKER_01 0:02

You trained for the career. Now build the business. This is the New Spring Minute, where aspiring tax professionals learn to launch and scale their own practice. Here's your host, Jason Carr.

SPEAKER_00 0:22

I've worked with tax preparers for years through my law firm. I've seen what trips new preparers up, and the same five mistakes show up over and over again. Every one of them is avoidable if you know to watch for each. Today, let's review some of the primary mistakes I want you to avoid. Mistake number one, not getting a signed engagement letter. I covered engagement letters in a prior episode, but I'm bringing it up again because it matters that much. A signed engagement letter is your protection if a client disputes your fee, claims you agreed to do something you didn't, or blames you for a result they don't like. Without an engagement letter, it's your word against theirs. With one, it's in writing. Every client, every year, before you test their documents, no exceptions. Mistake number two is preparing a return without seeing the source documents. A client tells you they made $45,000 and had $8,000 in medical expenses. You take their word for it and file the return. Then the IRS sends a CP2000 notice because the client actually received a $1099 they forgot about, and the medical expenses they claimed were for their dog, not for themselves. You're not responsible for catching every mistake a client makes, but you are responsible for asking for source documents, things like W-2s, 1099s, receipts, and mortgage statements. If a client tells you about income or deductions without documentation, note it. If it seems questionable, ask questions. Your job is to prepare an accurate return based on the information provided, and the information provided should be documented. Mistake number three, promising a refund amount before completing the return. This is one of the fastest ways to lose a client's trust. A client calls and asks, how much will my refund be? Before you've seen a single document, you really have no idea. And if you guessed, you've created an expectation that you may not be able to meet. The correct answer is always, I can't estimate your refund until I've reviewed your documents and completed the return. But I'll walk you through it step by step so you understand exactly where the numbers come from. That answer is professional, honest, and set you apart from the tax meals that advertise maximum refund guaranteed and then fabricate detections to deliver on it. Mistake number four is not knowing when a situation is beyond your scope. You're a tax preparer, not a CPA, not a tax attorney. There are situations that require a licensed professional with representation authority, things like a CPA, enrolled agent, or attorney. Those situations include unfiled returns for multiple years, IRS collection actions like liens and levies, audit notices, and anything that involves potential criminal exposure. When you encounter one of these situations, the right move is to refer the client to a qualified professional. This protects the client, protects you, and if you built a referral relationship, it actually strengthens your practice because the attorney or CPA you refer to will send clients back to you for preparation. Learning to recognize when a situation crosses from preparation into legal territory is one of the most valuable skills you can develop. It's also something I teach specifically in the tax business blueprint program, because as an attorney, I can draw the line clearly in a way that non-attorney training programs simply can't. Mistake number five is treating this as a seasonal business. January through April is when you earn the most per hour, but the preparers who build real, sustainable practices don't disappear for eight months. They stay in touch with clients through quarterly check-ins. They offer things like bookkeeping, payroll, or estimated tax calculation services. They post on social media. They attend networking events. They build relationships year-round so that when January comes, their pipeline is already full. They continue to learn throughout the year, continuing education courses and advanced training courses. The seasonal preparer restarts from zero every year. The year-round practitioner compounds. That's the difference between a side hustle and a business. So those are the five engagement letters, source documents, no refund promises, know your scope, and stay visible year-round. Avoid these and you're already ahead of half the preparers out there. If any of these mistakes hit close to home, or if you want to make sure you never make them in the first place, the blueprint program covers all five in depth with templates, scripts, and real scenarios. MewSpring.com. Check it out. I'm Jason Carr. Thanks for listening to the Mu Spring Minute.

SPEAKER_01 4:46

Thanks for listening to the Mew Spring Minute. Subscribe and leave a review so other future tax promotes can find the show. The Mew Spring Minute is produced by Mew Spring LLC for educational and informational purposes only and does not constitute legal or tax advice. For guidance specific to your situation, consult a qualified professional. Mew Spring LLC is not a love firm.