Page 3 - VTaxOnDemand Independent Industry Analysis of Accounting Industry

Report Statement

This research report was undertaken by Artem Strategies to assist Umbrella Financial
Services Company, LLC develop a comprehensive overview of the accounting industry,
specifically, the tax preparation industry and its relationship with the Internal Revenue Service
(IRS). The data and information found in this report is a result of resources uncovered through
conversations with the IRS Washington, DC office and data scraping techniques implemented to
find relevant data points. Sources identified through these methods were Forbes, The Atlantic
and Time magazine, Accounting Today, IRS, National Taxpayers Union, Cornell University Law
Center, Congressional Testimony, National Consumer Law Center, Consumer Federation of
America, H&R Block Annual Report, Wall Street Analyst reports, and investigative reporting.

Executive Summary

The tax preparation industry is riddled with nuances and complexities consumers must
navigate during tax filing season. One of the most important decisions taxpayers make on a given
year is related to the professional selected to accurately complete their tax returns, while
ensuring taxes paid to the IRS are kept at a minimum and maximizing their tax refund.
According to TIME magazine investigative reporting, there are approximately 600,000
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unregulated paid tax preparers in the U.S. These presumably untrained and unregistered
preparers help more than 42 million Americans complete their returns every year. Recent IRS
efforts to regulate tax preparation professionals were struck down by a federal court appellate
ruling. How are consumers supposed to navigate “The Wild Wild West” in the tax preparation
industry? VTax On Demand Tax Preparation Model uses the same process as traditional brick
and mortar offices except that VTax certified preparers and enrolled agents/CPAs and the
taxpayers are not face-to-face. Technology is used to connect the preparer and the taxpayer.
Using VTax technology taxpayers have convenient access to IRS tax law-certified tax
professionals, enrolled agents and certified public accountants.

Another hot topic item in the tax preparation industry, cyber security and identity theft,
have emerged in the Internal Revenue Service (IRS) radar. A recent Online Trust Alliance IRS
Free E-File Tax Services Audit found that 46% of free E-File tax services fail to adequately
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protect consumers. Turbo Tax, Liberty Tax Service, Tax Act, and the IRS have all faced
unprecedented cyber-attacks since 2013, where more than 2.4 million falsified social security
numbers have been utilized to file fake tax returns or steal taxpayer confidential information. For
example, in 2015, a stolen identity tax refund fraud ring in Alabama, was uncovered where more
than $24 Million were stolen through filing false individual federal income tax returns. At VTax
Tax Preparation, we have partnered with industry leading Identity theft prevention software,
Idology, to prevent Identity theft. VTax Tax Preparation model verifies taxpayer Identity when
information is submitted via the app.

1 http://time.com/56727/tax-scams/
2 https://otalliance.org/news-events/press-releases/online-trust-alliance-finds-46-irs-free-e-file-tax-services-fail

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