Recruiting And Training Tax Preparers

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By: Charles E. McCabe

When I began my career in the tax business over 30 years ago, getting good tax preparers was not very difficult. My employer, H & R Block, Inc., had developed their income tax school a few years earlier as an ingenious method of recruiting and training tax preparers to support their rapid expansion. As a district manager and later a regional director, I was able to find plenty of good people who were willing to pay to take the Basic Income Tax course with no guarantee of employment. We could observe the students in class for several months and determine which graduates we would hire, based on grades, participation, attitude, attendance, punctuality and other qualities demonstrated in the classroom. We rarely had trouble staffing our seasonal offices with intelligent, competent, friendly people whom we had taught to prepare tax returns. Today, virtually all national tax firms and many regional and local tax firms offer income tax classes to recruit and train tax preparers. Obviously, operating an income tax school has become recognized as a “best practice” for growing mass market tax preparation firms. Although the income tax school may still be the best way to recruit and train seasonal tax preparers, the environment is much different today.

Today's Personnel Challenge

In recent years, finding and keeping good employees has been a major challenge for most businesses, and tax preparation firms were no exception. Low unemployment rates created stiff competition for employees and drove wages higher. Fundamental demographic and economic trends reduced the available pool of prospective employees, especially for tax firms. Stay-at-home parents and early retires had always been prime candidates for employment during tax season. But increases in two-wage-earner households and full-time post-retirement careers have caused these pools to shrink. Employees are working longer hours and being paid more. With less spare time and more money, part-time jobs are not as appealing to many workers. At the same time, more tax firms have been operating income tax schools and competing for fewer prospective students. Fortunately for tax firms and many other employers, the recent economic downturn is resulting in lay-offs that will free-up workers. Without an adequate staff of qualified trained tax preparers, a tax firm cannot grow.

Even with more people are looking for jobs, it is not likely that many experienced tax preparers with availability for the three month tax season will be answering help wanted ads. Many people who respond to help wanted ads believe they know taxes because they've prepared their own returns and, perhaps, those of some friends and relatives. But unless they've recently prepared a volume of tax returns for the general public, their tax knowledge may be dated and limited. Temporary employment agencies tend to provide the same level of inadequacy. Good tax preparers are loyal to their clients and, due to employment contract non-compete provisions, they usually can't bring their clients with them. Hiring an experienced local tax preparer who has left his clientele behind often results in acquiring someone else's problem. At the very least, the employee may have to un-learn some bad habits. Occasionally we've been lucky and picked up a good experienced tax preparer, usually someone who has just moved into town. Finding good people who are interested in tax preparation and teaching them taxes is still the best way we've found to staff our growing tax business.

Identifying the Best Tax Preparer Prospects

The best prospective tax preparers are not necessarily accountants. Accountants and other financially oriented professionals tend to be more numbers-oriented than people-oriented. Taxation is not accounting; it is law. Preparing tax returns is a very personal process that requires someone with strong people-skills to satisfy their clients. To the client, the interview experience can be just as important, if not more so, than the tax preparer's knowledge. That's why I named my company Peoples Income Tax. Amazingly, the trademark search firm I hired when I founded the Company in 1987 could not find another income tax firm named Peoples anywhere in the United States! We look for individuals with strong people-skills and we teach them taxes.

Clients don't like to see new faces every year. Most clients want to establish a relationship with a tax preparer who will be available year-after-year. Ideally, the tax preparer will also be available to handle any tax problems and questions during the off-season. Continuity of tax preparer may be less important to low-income clients who seek fast refunds and are primarily concerned with convenience, cost and speed. However, relationships are important to everyone. Also keep in mind the high cost of training and developing a new tax preparer. High employee retention is difficult to attain when you can offer only seasonal employment.

The best long-term tax preparer prospects are people whose personal needs can be met through seasonal careers, such as: (1) homemakers with young children in school, (2) early retires who like to travel or spend time with their grandchildren during the summer, (3) financial services professionals who can make their own hours and may benefit by meeting prospective clients, (4) people with complementary seasonal occupations, (5) moonlighting professionals who want to earn extra money, (6) college seniors and graduate students who need business experience, and (7) blue-collar workers who want to break into a new white-collar profession. Look for people who see tax preparation as a rewarding career because they like to help others, and avoid hiring someone whose primary motivation is money. You want people who are likely to stay with you for years. Hiring someone who is “between jobs” may provide a quick fix to a personnel shortage. However, unless you can reasonably expect the person to return next tax season as a part-time tax preparer (after finding a year-round job) this will usually prove to be a poor hiring decision. Such dilemmas can be prevented through proper planning and preparation during the off-season. The best strategy is to find good people with the desired qualities and interest and teach them to be tax preparers. This can be accomplished by operating your own income tax school, or by arranging for your candidates to complete an income tax course offered elsewhere (either in-class or by correspondence).

Sources of Good Tax Preparer Prospects

Help wanted advertising usually comes to mind first. Classified help wanted ads are inexpensive and can be effective. The major local newspaper, as well as local printed employment guides and Internet job listing sites should be considered. If your city has a daily newspaper, advertise only on Sunday (or Saturday if the newspaper is published only six days a week). Remember that your candidates don't know they want to be tax preparers or students. You are offering a rewarding seasonal career, with flexible hours and pleasant working conditions, using computers and interacting with people. You are not seeking accountants, although some accountants may be interested and, if they have good people skills, qualified. Remember that many people who read help wanted ads are looking for a job now (especially students), and may not have the patience to take a tax course in the fall to qualify for a job starting in January.

Temporary Employment Agencies may seem like viable a solution to the need for temporary help, but the reality is they usually can't meet the needs of tax preparation firms. Most accounting and finance professionals registered with temporary employment agencies are not experienced in preparing individual tax returns for the general public and would need to complete a tax course to become qualified. Occasionally temp agencies have former employees of Block or other mass-market tax preparations firms. However, as previously noted, unless the tax preparer recently moved into town, you may be picking up someone else's problem, for a higher hourly rate! In a competitive market, you might find a temp agency that is willing to recruit and screen prospects to attend your tax school without compensation as a requisite for being placed with you after graduation. But you should be able to find tax school candidates without their help. Also remember that employing a temp is like hiring someone who is “between jobs” and your clients don't like to see different faces each year. Although the higher hourly rate of a temp includes payroll taxes and benefits, and the agency handles the screening and hiring, you are still paying the extra cost of the agency's profit. Using a temp agency could be more effective for fast refund offices. As a source of professional tax preparers, I think an agency should be your last resort.

Employee Outplacement Services provide assistance to employees who have lost their jobs due to restructuring and downsizing. Some services are private businesses to which employers refer their displaced employees, and often pay the fee to ease the transition. Some larger employers provide in-house outplacement services. In addition, many communities have outplacement services provided by nonprofit organizations. Your state unemployment agency might also make their clients aware of job opportunities you offer. Often displaced employees are nearing retirement and could make good long-term seasonal tax preparers. All such services should be contacted and made aware of your seasonal employment opportunities.

Women and Senior Support Groups often provide career services for their members. Listings for such groups might be found in your local Yellow Pages directory under headings such as “Associations,” “Senior Citizens Service Organizations” and “Womens Services & Organizations.” Your local Chamber of Commerce might also be able to provide a directory of social service organizations for you to contact.

The Military is a source of prime candidates for second careers in tax preparation. If there is a military base in or near your community, you should contact the career services officer. Some of our best long-term office managers are retired military officers.

Colleges and Career Schools should also be contacted. Establish relationships with business school faculty members who are in a position to refer their best students to you to obtain practical career experience. Make the school career services office aware of your job opportunities. Most private career schools need to demonstrate a high level of career placement to maintain their state license requirements and provide statistics for their literature.

Your Clients may be one of the best sources of prospective tax preparers. We've always promoted our income tax school to our clients by displaying posters and tax school brochures in our tax office reception areas. We ask our tax associates to make clients who they feel would be good as tax preparers aware of opportunities and encourage them to take our tax course. During the height of the personnel shortage, we sent letters to all prior clients making them aware of our income tax school and offering tuition scholarships for any client who wished to take the course. We required only that they pay for the cost of their books and materials. This letter produced more students and employees than all of our paid advertising. Who would be a more positive employee than a satisfied client of your tax firm?

Employee Referrals are always an excellent source of good new employees. Your employees should be encouraged to refer prospective employees to you. Many companies offer substantial financial rewards for referrals that result in new hires. We recently adopted such a policy by offering a finders fee equal to $10 times the average hours worked per week during tax season by a referred employee who successfully completes the tax season. Our employees are also authorized to award full-tuition scholarships to people who they know would be qualified and willing to become employees upon successful completion of our Comprehensive Income Tax Course. Again, the scholarship student is required to pay the cost of the books and materials. As long as there is room in the class for another student, this costs the company nothing.

Training Tax Preparers.

Your tax preparers will be much more productive and less frustrated when the pressure is on if they receive proper training. Tax preparer training should include four elements: (1) income tax school, where they learn how to correctly prepare Federal and local state income tax returns and interview clients. (We incorporate interview training into our tax school), (2) pre-work training in your firm's policies and procedures, including customer service, (3) computer tax software workshop training, with computers available to students (1-3 students per computer), and (4) on-the-job training under the supervision of you, your office manager or a veteran tax preparer. Schedule on-the-job training early in the season before the office gets busy. Have new tax preparers prepare practice tax returns, by computer, using tax school problems, your tax software firm's tutorial and/or actual prior year file copies of tax returns.

How to Set Up A Tax School

To operate your own tax school, you will need the following:

  1. a qualified instructor
  2. a course curriculum
  3. instructional materials
  4. a classroom
  5. a plan to recruit students

The instructor should be you or a veteran tax preparer of your firm who has good communication skills. Adults are much easier to teach than children. If you are a good manager and have solid tax knowledge and experience, you should be a good tax school teacher. If you charge tuition, your firm may need to be licensed as a private career school (check the laws in your state). Many tax school operators offer their courses tuition-free to avoid licensing, and they charge a fee for books and materials to cover their costs. If you are operating a licensed tax school, your instructors may have to meet education and/or experience requirements of the licensing agency. Be sure to research the laws governing private career schools in your state.

The Course Curriculum is a critical element. Peoples' The Income Tax School Comprehensive Income Tax Course is comparable to the basic income tax preparation courses offered by H & R Block and Jackson Hewitt. The course consists of twenty 3-hour lessons, ideally taught over ten weeks (two morning or evening classes per week). The curriculum covers Form 1040 and all related schedules and statements. More complex subjects, such as sale of property and self-employment are not covered in-depth in the basic course. A ten lesson short-course version is also offered by Peoples to train tax preparers who will be limited to preparing basic income tax returns or processing Refund Anticipation Loans. The short course covers the basics of Form 1040 including Schedules A & B and Form 2441, as well as Form 1040A, 1040EZ, EITC, E-filing and IRS Due Diligence. Corresponding local state and locality income tax preparation should be taught along with the Federal. Peoples' curriculum also includes taxpayer interviewing techniques. Subjects should be presented in a logical sequence, beginning with the basics and gradually progressing to more complex tax return situations. The course curriculum should also include in-class exercises and quizzes, homework problems and reading assignments, plus mid-term final exams. Students should not be permitted to use computer tax preparation software to do their tax course problems. Graduates can be taught how to use your tax preparation software before they are scheduled to prepare tax returns. Tax preparers should be encouraged or required to complete advanced continuing professional education (CPE) annually after completing the basic course and working as tax preparers. Peoples Income Tax offers advanced courses for in-house instruction. NATP also offers many CPE options.

Instructional materials can be developed in-house or purchased. Students should have access to reference books. A comprehensive reference such as the Commerce Clearing House (CCH) U.S. Master Tax Guide can be used as a text. However, for a basic tax course, IRS Publication 17, Your Federal Income Tax is the best reference book. The student course text should include a syllabus (course outline), student survey and evaluation forms, a lesson-by-lesson summary of the subjects emphasizing key points, special advice and interview tips for tax preparers, examples, illustrations, tables and charts, in-class quizzes, homework problems, reading assignments, and a glossary of tax terms. Students will also need an ample supply of blank tax forms to work out all of the problems in the course. Another critical element is the instructor's guide, which should include lesson plans with examples to use in class, key points to emphasize, role playing exercises (to teach interview techniques), and student attendance and achievement forms. The instructor's guide should also have answers to all student text quizzes, problems, homework assignments and mid-term & final exams, plus grading criteria. It is highly recommended that before each lesson the instructor read the reading assignments and do the problems assigned to the students to properly prepare to teach the lesson. The instructor should also be provided with a chalk or white board with supplies, plus an overhead projector and transparencies of all tax forms to be covered in the course. As an alternative to the overhead projector and transparencies, an LCD projector can be used to show completed tax returns and forms prepared by computer. A white wall or a large window shade can be used as a projection surface. The Income Tax School materials include a tax school operator's manual, instructor's guide, student manuals, tax forms, reference texts, and transparencies, as well as optional marketing materials, and may be purchased at a discount by NATP members through the NATP bookstore.

The Classroom does not have to be fancy, but it should be functional, comfortable and clean. A large open room is ideal. A conference room can also be used. Folding tables should be provided for students to open their books in front of them. Three students can fit at a 30” x 72” table and two can fit at a 24” x 48” table. If you have a large group, the 24” x 48” tables take up less space and are easier to arrange. Tables can be configures in rows, a U-shape, or like a conference table. Folding tables are inexpensive and can be purchased from suppliers such as OfficeMax, Staples, Home Depot, Costco and Sam's Club. Most tax offices have enough chairs, but additional inexpensive stacking chairs can be purchased if needed. Furniture can also be rented or borrowed. If your office is not large enough, you will need to find an outside classroom. A hotel meeting room is an option, but, unless you can work out a special deal for multiple 3-hour sessions, a hotel may be cost-prohibitive. A better alternative may be to reserve a room, for minimum or no cost, in your local community center, chamber of commerce, YMCA, Knights of Columbus, library, school or church. If this fails, you might be able to use the conference room of another business, or a vacant office or store.

Your plan to recruit students would include the suggestions made earlier in this article. The Income Tax School package includes optional marketing materials (prospective student brochures, window banners, posters, sample ads, and inquiry & follow-up forms). A successful student recruitment campaign involves a multitude of activities. The key strategy is to think about organizations and places where you will find the ideal type of people you want as long-term employees. Then you should determine how to reach them with information about your opportunity, and how to entice them to consider enrolling in your tax course.

Alternatives to Operating Your Own Income Tax School

If you lack the resources or time to operate your own income tax school, or if you need only one or two employees, there are other options. Many tax firms send their employees to tax courses operated by national or local competitors. Students sponsored by competing tax firms often enroll in our basic and advanced tax classes. We don't mind as long as they pay full tuition and don't try to recruit our other students. Some colleges offer practical courses in income tax preparation, but most college tax courses focus more on theory than application, and they rarely cover state income tax preparation. Yet the foundation provided by a college tax course can reduce the amount of additional training needed. We have seen two or more local tax firms pool their resources to jointly offer a tax course. One firm might provide the teacher, while the other provides the classroom. Both firms can share in the cost of advertising, promotion and instructional materials. This strategy will work best if the firms are not competing head-to-head for clients in the same local market.

Distance learning is another option. Employees can complete a home-study tax course, although independent learning requires greater self-discipline and many home-study students do not finish. However, with encouragement and support from you as the employer, the success rate should be much greater. Peoples' Tax School enrolls a number of traditional correspondence students nationwide each year and will soon make its basic tax course available via the Internet. The National Association of Tax Practitioners and The College for Financial Planning have teamed up to offer NATP members credible, convenient, and affordable continuing professional education via the Internet and paper and tape-based products. Visit the NATP homepage and you will find links to educational programs.

Apprenticeships represent another option. You and/or another veteran tax preparer could work with a college student or a receptionist to teach the understudy taxes on the job. This may be a slow process, and it requires patience; but the result could be a highly qualified, loyal tax preparer who has learned tax preparation the right way!

Guerilla Tactics

Suppose tax season is just around the corner and you realize that you will not have enough tax preparers to staff your office. Maybe a key tax preparer decided not to return; or worse, you've learned that she is going into competition with you and will likely solicit your clients whom she served last year. If you'd properly planned and prepared, you wouldn't be in this situation. You should have had your tax preparers sign employment agreements including a legally enforceable non-solicitation provision. But if you are in such a predicament, what can you do?

It's time to use guerilla tactics. Fortunately, some qualified tax preparers seem to “come out of the woodwork” during December and January. You should run prominent help wanted ads for experienced tax preparers (refer to the previous section on help wanted advertising). If ads are grouped by job title, run separate ads under both “Accountants” and “Tax Preparers.” Advertise continuously through mid-January. Obtain a mailing list from a list broker or tax industry supplier of tax practitioners within commuting distance of your office(s) and send out a job opening notice on your letterhead, assuring complete confidentiality for respondents. Contact reputable temp agencies that place accounting and financial professionals for experienced tax preparers. Be very specific as to the tax preparation experience you require. Screen prospects by phone and schedule qualified candidates to take a tax test in your office (our tax school operator's manual includes a test of basic tax knowledge). Most applicants who come to us from help wanted advertisements fail our tax test and realize that they need to take an income tax course to become qualified. If you need several tax preparers, consider conducting a free accelerated income tax course for job applicants, including daily lessons over a two or three week period. Schedule the successful graduates for additional training in your computer software and company policies and procedures. If your practice includes fast refund returns (Refund Anticipation Loans, Electronic Refund Checks, etc.), you could conduct a “Short Tax Course” to train people to prepare only those basic returns and, thereby, free-up your senior preparers to handle only the more complex returns.

You should also take measures to maximize the productivity of your existing tax preparers by providing them with adequate tools to do the job, including tax office assistants to greet clients, schedule appointments, answer telephones, pull files, conduct pre-interviews and process and transmit tax returns. Ask experienced tax preparers to work extra hours. If you have part-timers who are employed full-time elsewhere, they may be willing to take vacation time from their regular jobs during peak periods. If you serve walk-ins, call your prior clients to schedule appointments and spread out your work load. Ask your priors to come in during slower days and times. Take drop-off returns and complete them after hours. Extend your office hours. In short, do whatever it takes to serve your clients and keep from losing business. After you get through the tax season, begin planning early so you will not be in this situation again next year!


Finding and keeping good tax preparers is essential to building and growing a quality tax service. Qualified seasonal tax preparers are scarce and competition for experienced tax preparers is stiff. Experienced tax professionals command a high price and may not become your best long-term employees. Retention of tax preparers is essential to maintain client relationships and contain recruiting and training costs. A proven “best practice” is to operate an income tax school to recruit and train entry-level tax preparers and provide continuing professional education for experienced tax preparers. There are alternatives to operating your own income tax school, but “growing your own” tax preparers is the best way to ensure an adequate staff of competent, people-oriented tax preparers who will continue year-after-year to serve your valued clients. Support is available from NATP and other sources.
About the author, Charles E. McCabe

Chuck, a 34-year veteran tax industry executive, has managed hundreds of tax preparation offices in the U.S. and Brazil. He earned his B.S. degree in management from Adelphi University and Executive M.B.A. degree from Pace University. He is founder and President of Peoples Income Tax, Inc., which operates 16 tax preparation offices in central-Virginia and licenses income tax school and tax practice management systems to independent tax firms nationwide. Chuck is co-author of two books on career education for adults and numerous articles on adult education, income tax, and management. He has taught small business management as an adjunct faculty member of Virginia Commonwealth University.

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