Missing Information: A Case Study in Client Inquiry for Preparing A Federal Tax Return

• In Event: Case Studies in Tax and Financial Accounting

Abstract

One of the most challenging aspects of teaching an accounting student to prepare a federal tax return is making sure all required information has been collected and organized. There are countless textbook examples for students to practice their taxation skills with but they have one thing in common: all the information needed to prepare the return is given to them in the problem. Yet how often is this the case when they will prepare a return at some point in their future?

This case study attempts to combat this shortfall by having students prepare a federal tax return for an individual, but also requiring them to communicate with the client to request additional information. The case begins by providing students with many of the same pieces of information that a typical textbook problem would. A copy of the current year W-2, various information about personal income/expenditures for the year, and a copy of the prior year tax return. The case then challenges students to find other pieces of information that should be included on the federal tax return and have not been provided.

Some of this information can be uncovered by looking through the prior year tax return to see what may be missing from current year information. Other information will need to be inquired about due to the taxpayer did not giving all information necessary to report the event. The most difficult items for students to find include “random” changes like a move to a different address or a previous dependent moving out of the house. All of these thought processes require a student to think critically about the information they have been provided and their ultimate goal to prepare the return successfully.

The case is organized in a way to require students to inquire with the course instructor to gather the information needed to complete the return. This allows students to practice formal interviewing or professional correspondence through email, whichever they prefer, to gather additional information. This is perhaps one of the most important aspects of the case because students traditionally do not get much practice communicating with a client to ask for additional information even though this will be a very important skill needed in their future careers.

Author

• Justin Crouse, Wartburg College