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Be Wary of Bureaucrats' Advice

You probably already know that when you call the IRS and talk with a person there that the advice they provide cannot be relied upon. The IRS may not enforce penalties in this situation but that is cold comfort to the taxpayer who has unexpected tax liability after following advice received. Other forms of guidance from the IRS may be relied upon, but that depends on the situation.

Now we can add the Social Security Administration to this list. When one seeks advice about different ways to take their benefits, they may well receive incorrect advice from the bureaucrat at the other end of the phone. You may lose some level of benefits to which you are entitled because of their mistakes and, as in the case of the IRS, there is no real recourse.

A paid tax professional providing you erroneous advice about your tax liability may, in turn, be required to reimburse you to some extent, unlike the IRS. This is at least some help to the customer but still requires one to go through the process. Not surprisingly, it may be attractive to customers to seek paid professional advice about their Social Security options as well. If the expert is wrong, the expert, unlike the bureaucrat, may be required to pay for that mistake.

Of course, this puts pressure on both the customer in choosing their expert and the chosen adviser in providing advice to get it right. A big tax mistake by a tax professional could result in you getting less than what you’ve lost if the tax pro does not carry insurance or have the resources to pay for that mistake. On the tax professional’s side, getting into the advice business carries with it some real risks and it is wise to be careful and thorough in your work. 

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