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Pro Spotlight: Scott Transue on Becoming an IRS Enrolled Agent and the Benefits of Using Taxfyle’s platform

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Pro Spotlight: Scott Transue on Becoming an IRS Enrolled Agent and the Benefits of Using Taxfyle’s platform

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Pro Spotlight: Scott Transue on Becoming an IRS Enrolled Agent and the Benefits of Using Taxfyle’s platform

Get ready to dive into Scott Transue's Pro Spotlight feature, where he takes you on his journey through the world of tax accounting. From igniting his tax passion to crafting a dynamic career, discover his transition from the New York state legislature to a thriving tax expert. In this feature, Scott describes why he desired a change in his career, how he sought success as a tax practitioner, and how he prepared to become an IRS Enrolled Agent. 

Q: What got you into being a tax preparer? 

Transue: Well, way back in 2010, it happened a little bit surprisingly, if you will. I had been doing taxes for friends and family, mostly non-compensated, of course. And I saw an advertisement for one of the big chain tax firms. So I applied and got a call from the franchise owner, I don't know maybe a week later. They asked me to come in and I got the job, and wound up staying with that particular franchise owner for about five years, including a branch manager position about two years in. So it gave me the chance to see all kinds of different tax situations on the 1040 side. And it really solidified that this was something that I wanted to do, if nothing else part-time, but also in many cases full-time as a career. So it happened a little bit, surprisingly, but I'm very happy that it did happen.

Q: What were you doing before?

Transue: I had been in various jobs within the public sector, state of New York as an accountant, and also spent some time as a policy analyst with the New York State Legislature when I was in graduate school. So my career has been varied. But it has been almost exclusively accounting-related since 2010.

Q: What is it about taxes that drew your interest?

Transue: I looked at taxes, almost like somebody else might look at a jigsaw puzzle. It was filling in the blanks, and it was completing something where I also had the opportunity to research things that I didn't maybe know an awful lot about. And that was something that I enjoyed doing. So it also fits my personality really well. I'm a, I'm a person who enjoys looking things up and solving issues and solving problems. So it's been a, it's been a really nice fit.

Q: How do you compare your career in tax to what it was before? 

Transue: It's a lot more stabilized, I guess, is the way to put it. I think previously, I was applying for positions and taking them without necessarily having a really long term path in my head. And that comes I think, to some degree from being a non traditional student, I was in my late 20s When I was in graduate school. So it wasn't something that I was doing straight out of my four year degree. And I think it's it's a it's a career where, obviously you make it, what you want to make it if you want it to be full time, it could certainly be full time. If you're okay with it being part time, then certainly it can be. But there's also other things around taxes, besides preparation that one can get into that can be kind of fun, too. So it's been a nice, it's been a nice thing to settle into.

Q: What was the moment where you feel your decision to become a tax preparer really paid off for how you want your life to be?

Transue: It's really funny that you should ask that because it was the pandemic that really solidified it. Because prior to the pandemic, I had been on the seminar circuit for three different companies over the course of about seven years. A lot of travel, didn't mind traveling, but it was a lot of travel and you are for better or for worse. You are beholden to airline schedules and airline issues and getting into hotels really late at night, and so forth. I enjoyed the teaching part. The travel part Got to be a little bit of a hassle on occasion. So when the pandemic occurred, and I certainly don't want to make light of the pandemic, but when it did occur, that industry stopped for the most part except in a virtual sense. So I was forced, if you will, into deciding what my next move was going to be. And luckily for me, I had the tax knowledge and the Tech experience behind me, got my Enrolled Agent license back in 2014, while I was with the franchise owner, and I realized that, hey, this is something that I can do, as much as I want to, obviously, during the season a little a little bit less offseason, but still, there's work out there. I was not beholden to a cubicle as as it were, if I didn't want to be, I was not somebody who ever really enjoyed the cubicle atmosphere in the first place. I much preferred remote work, if I could get it. And I fashioned my life around working from home. And it was not something I planned. It was because of the pandemic. But in my case, it seems to have worked out very, very well.

Q: How does it feel having that stability now versus when you had a much more hectic schedule?

Transue: Depends on who you ask. If you ask my spouse, she, you know, she was used to me being gone five days a week and being home two days a week. And now I'm home all the time. And we joke a lot of times that, hey, this wasn't the agreement, but it is what it is. I really enjoy the remote aspect. Because I can take work from pretty much anywhere that I want to with the Enrolled Agent license, obviously, that applies in all 50 states, even though not all 50 states have an income tax. And I can work with who I want to work with, I can do the kind of work that I want to settle into. If I want to focus purely on business returns, I can do that. If I want to focus a lot on 1040s for a while, I can do that as well. So it's a nice merger of skills, and also just my inherent personality. So like I said, it has worked out, it's worked out very, very well.

Q: You mentioned getting your EA credential in 2014. What spurred you to obtain that credential?

Transue: A few different things. First of all, realizing that as what's called a non-credentialed preparer, which is to say someone who isn't either a CPA or an attorney or an enrolled agent, the prospects I had for getting hired by certain clients were limited. The prospects for doing certain types of returns were limited without having that credential. So I was looking online one night and realized the IRS offered that license. I didn't know it at the time. And I certainly didn't know the IRS sponsored a license where the license was intended to help the taxpayer versus helping the IRS that was kind of ironic to me. But indeed, the license did exist. And it was a matter of going through an exam. That was grueling. Back in 2014. It was grueling I, I've heard that it's gotten even more difficult since then. But getting that license enabled me to advertise myself or tell anybody that was thinking of bringing me on that I was a credential preparer. And it's, it's resulted in opportunities that would not have come about had I not gone ahead and gotten the Enrolled Agent certification.

Q: How do you prepare for an exam like that?

Transue: In my case, I didn't go through a class. Some people do and that's fine. I didn't go through a class. What I did do was went out and got a bunch of study manuals that you can get back then it was brick and mortar probably, but nowadays, you can get them off Amazon or whatever online source you want to. And there's three parts to the exam. The first part is the individual side, which is the 1040, which I already knew, obviously a great deal about from having spent five years with the franchise. The second part is business returns, which is everything from s corpse to partnerships, little bit on estates and a little bit on trust as well. And the third part is all about ethics. And I just I studied on my own. And to give you an idea, on the 1040 side, it was probably about 100 hours of study. On the business side, it was double that it was about 200 hours. And on the ethics side, it's was maybe 50 to 75, it was the least of the three. And the way the exam works is you schedule it with a particular Testing Center. And it's like going into a library, and you have headphones on and you are in front of a computer and you have a 10-key calculator available to you, obviously nothing else. And you answer a bunch of questions. And, each section is about three hours long, I think the ethics section is the only one that's shorter. I think that's only about 90 minutes to two hours. So it's it's not all in one day, by the way, you scheduled the three parts on three different days, that would be just cruel to have to do it on one day. But I passed all three on the first try very happy to have done that. And here I am, nine years later. So it's been a great treck.

Q: How do you balance all of that time preparing for the exam with your already existing career?

Transue: Right, a lot of studying, obviously at night, and sometimes late at night. I didn't mind because I knew the rewards that were on the other side, I didn't have a problem with being up until some in some cases, midnight, one o'clock in the morning, even when I knew that I needed to be up, you know, six, seven a.m. to get to work. So it's a matter of knowing the rewards that await you on the other side, you're willing to go without a little bit of sleep if you need to. And that the nights before each of the sections of the exam when I actually had no my stuff and be in front of a computer without any reference material. Those were nights, right? It's very much I'll be honest with you. But I got through it. And I'm happy I did and very happy to be where I am right now.

Q: Do you have any type of specialty with tax preparation?

Transue: Well, I do an awful lot of S corp returns, I do a lot of partnership returns. And by nature, that leads back to the 1040 a great deal. I have not done very many foreign returns just because the opportunity hasn't presented itself. Nor have I done very many estate or trust returns. So it's been very heavy on the S Corp. On the partnership side, obviously a great number of schedule C's for people that have not elected another type of tax treatment. And for reasons that we can get into if you want to, I tend to recommend that people get away from the schedule, see if they can, and move into 1120 s or a 1065 arrangement if they can possibly do so. But those are the areas that I seem to have settled into. And they have worked quite well Q: Why is it that you would offer people that recommendation?

Transue: Primarily for two different reasons. The one reason predominates over the other one and that is that schedule C's on a 1040 tend to be looked at a lot more closely by the IRS, then sometimes a k one from a partnership or an S corporation might be looked at. I think the IRS view on this. I don't have any proof of it. But it seems to be it's something that I've kind of come to a conclusion on myself is that when you have a schedule C the IRS is always concerned or a lot of times concerned about how much of a profit motive you really have with the company or the business that you are claiming. If you go to the lengths of getting a let's say an LLC name, that's what most people do now. And then the 2553 form I believe it is where you asked to be treated as a S corp or as a partnership. if that applies with the IRS, I think the IRS viewpoint on you changes where they have documentation that you've sent in, that says you have an LLC, you want to be treated as an as a separate entity for that LLC. And I just think that they look at that as proof of profit motive where you're in business. And the audit gloves tend to not come off so readily as they do with a Schedule C, I recently met with a friend of mine that had had a Schedule C and has had a Schedule C for probably a decade now. And this person and his spouse had been getting, they got audited four times. And I have to believe, although I don't have any proof of it, that it's because they're still operating as a Schedule C rather than as one of the other entities. So I made the recommendation, and we're talking about it.

Q: You mentioned earlier that tax preparation is almost like solving a puzzle. How would you describe that?

Transue: Well, no matter what the return is, and no matter who the client is, you're getting a bunch of documentation. To start, they're sending you documentation, or they're sending documentation to some portal. And one of the first things that any preparer has to do, I'm no exception to that rule, is look at the documentation that's been sent. And number one, you'll get a decent lay of the land, if you will. Regarding the taxpayer situation, do they have a retirement account? Do they have a business? Are they married, do they have children, so you're going to get a very 36,000 foot overview of their situation. But in almost every case, as well, there's going to be documentation missing. And knowing what that documentation is that has been included, that comes with experience and having gone through lots and lots of different returns. So if they mentioned that they have a 20-year-old in college, but there's no tuition statement that they've uploaded, that's something that you need to ask for. So I think we are in the business, not so much of doing the return so much. Although that's what we ultimately do so that it can be filed, we're in the business of actually guiding the taxpayer, into providing us what we need to do what I call maximize their situation. That means either maximizing their refund or minimizing how much they owe, I'm of the opinion that clients pay us not so much for the return itself. That's a commodity, they're paying us for advice, if you will, on minimizing what they owe next year, or maximizing what they're gonna get back next year. So it's as much a counseling session in my view as it is a number cruncher and put numbers on a form of tax software.

Q: What other examples you have that kind of symbolizes that balance of like you're not just preparing return, but you're providing that, you know, financial advice that would be carried on, you know, years or decades from now?

Transue: Sure, I had another instance with a separate client where they owned multiple rental properties. And, when I became their tax preparer, they told me right away that the year that they had hired me to file for them, they had sold five of their rental properties. And I point blank asked them, Okay, what was your rationale for selling all five properties in one year? And they said, Well, we wanted to, you know, invest in some other things, and we figured that selling these five properties would be the best way to raise money to do so. And I said, Well, you know, there's there's certainly merit in that I'm not going to deny that part. However, are you aware that there's something called depreciation recapture that you're that you're likely going to have to pay taxes on it? They had no idea what I was talking about, well, when you claim depreciation on a rental property, when you sell that property, more likely than not, you're going to have to pay taxes on the depreciation that you claimed in earlier years. And that was quite a shock to them. And also, rental property, may or may not be capital gains on it. Depending upon how long you've owned the property, your cost basis may be much lower than your sales price. And you could have a fairly hefty tax bill between the depreciation recapture. And whatever capital gains might be due on the sale. And as it turned out, they did they had a pretty high tax bill, because this was property, these were properties they owned for over a decade. And we talked and I said, Listen, you know, understand, if you do this, again, just understand that you're going to owe taxes on the depreciation recapture plus any capital gains that may or may not be incurred as a result of the sale. And they were very appreciative of the advice. And I kept them as I kept them as a private client for quite a while. And they reached out to me quite a bit over the next two or three years, because of the fact that I mentioned all this to them, and they didn't have any idea. I wouldn't expect the taxpayer to know that that's what they're paying us for. So that was another example for you.

Q: How did you first hear about Taxfyle? 

Transue: I believe that your colleague, John Jost, reached out to me over LinkedIn. Actually, he noticed that I was a credentialed preparer out here in Vegas, I don't know if being in Vegas made any difference or not. But he noticed that I was a credential preparer. And that I had been doing it for quite some time. And he reached out and said that you folks, we're always looking for good people to come on board and, and such. And I said, I'd have I'd be happy to talk to you. And we met much the same way you and I are doing this interview right now. And what's what what struck me first of all, was that we didn't have any advertising costs that we needed to do incur with Taxfyle. That these were either CPA firms on the outsourcing side, or these were private, or these were individual clients, I don't want to say private, because they're your client, not mine, that were reaching out that you had paid money to get. And we were coming in and preparing the tax returns for them and giving advice as needed. And it seemed to me a great marriage between the skilled pool of credential preparers out there, and perhaps not having the need to shell out advertising dollars to build your own book of business. So I was very pleased when John reached out, we had a great chat, and I'll be entering my second year with Taxfyle this coming year.

Q: How did Taxfyle fit into what you wanted out of your career?

Transue: Well, I think it was a couple of things that really matched me if you will. And of course, the first thing was the flexibility that's offered. If you don't feel comfortable taking on a certain outsourcing job or a certain client, you don't have to, you're no one's pressuring you to take them on. There might be issues, especially on the outsourcing side with various pieces of software that maybe you're not attuned with or skilled on. And if you don't feel as though you would be able to be a good match for that particular outsourcing firm. You can just say listen, I don't feel comfortable, they use software I'm not used to, and such. Then again on the other side of the coin, there's always an opportunity to learn here and I find that to be quite valuable. There's always something to learn either in the tax arena itself with the IRS or on the software side because a lot of people are coming into the tax field with their, their individual way their individual software that will help us take care of returns on a more efficient scale. So Oh, there's always something to learn. And if you don't know a piece of software now, rest assured, I've always found that Taxfyle was very good at giving you the opportunity to learn so that when the next season comes, maybe there's an account or two, you can pick up that you weren't able to the previous year. So it's I think it's quite valuable.

Q: How can other enrolled agents like yourself maximize their credential through Taxfyle’s platform? 

Transue: Well, I think the more you increase your knowledge base, especially along the lines of different software that's out there. And I don't just mean tax software, I mean, the support software that helps data get imported into a return without necessarily the need for a lot of manual data entry. I think the more you increase your skill set in those areas, I think the the world of tax prep really opens up to you in a way that maybe it wouldn't have otherwise. And especially during the season, whether it's the main season or the fall extension season, I think you can pretty much pick up work as you want to. And if you just don't feel comfortable taking on a specific job, he just say, it's not it's not for me, but thank you anyway, I, I really think it's for, especially for experienced folks who had been doing 1040s for a while. And even business returns for a while, it opens up a way for you to expand what you are already doing without having a lot of the costs involved in doing that. And if you're a brand new preparer credentialed, I would think would be important. If you're brand new prepare, I think this is a great way to get going in the field, and hone your skills and see if this whole thing called Taxfyle is something that you want to devote a lot of time to. I worked with a lot of great people here. yourself, John, the whole staff is just amazing to work with. And very responsive, very willing to listen to the field, which you don't always find everywhere. And how can we improve? I've been asked that several times, how can we be better? How can we help you do your job better? How can we be better at Taxfyle, and I find that to be quite valuable to be able to give that input.

Q: How valuable is it to have a support team? 

Transue: I think it's all the difference in the world, Christian. Honestly, because we we run into issues, just like any other field runs into issues either with outsourcing firms or with clients that come in privately through the portal. And it's just great to have someone to bounce ideas off of when you need to. And the Slack channels y'all have set up and people being so responsible for email, I have never once felt like I was just out here on my own without any assistance or support. And I think that that is just absolutely valuable. Invaluable. Actually, they can't put a price tag on that. And you know, there are times when things come through, there's no issues and all is good. But when there are things that need to be addressed, when there are questions that need to be answered, you folks have always been very quick to respond usually the same day, and if not the same day, definitely the next day. And the Slack channel has been especially valuable in that regard. I can send a message and likely get a response within an hour or two. And everybody is very open to hearing what you have to say there's no there's no instances of oh don't don't don't come to me with that you should already know that that that's never happened with Taxfyle. And it really puts me at ease in the field. And I'm sure our you know, other other Tax Professionals would agree that that that the level of ease that we feel working from home, as we do or working from a private office as some of us do it, it makes this a very rewarding experience.

Q: Why is it significant for somebody to know multiple different tax filing software?

Transue: Fabulous question, and I'll tell you right now, the reason is that we have the opportunity if we so choose to work with various CPA firms around the country that need our help, especially during the main season crunch. And they already have their ways of doing things. And they should, you know, the different firms have different methods and processes, and just ways of doing the return or getting the getting the data prepped. And the more you can learn, the systems they use. SurePrep is one that's becoming all the rage. It's not something that I knew a lot about. This season, I'm, I am now learning and it's it's fine. But there are firms out there that you SurePrep and other support software, because they are high volume, and they can't spend a lot of time on data entry, I fully understand that part. If you're a firm that's doing 1000s of returns during the season, you can't get bogged down and data entry, you'll never get the job done. So they're using these types of support software to as much as possible, automate the process of bringing data into returns. So the more you can learn what they are using, and such, the better and asset you are to them. And the more likelihood there is I think of a view fitting in well with a certain outsource CPA type of job.

Q: Is there anything I may not have asked you that you think is important people know about either yourself or Taxfyle’s platform?

Transue: The only thing is I am not a native to Las Vegas, I actually grew up in upstate New York. And obviously spent a good amount of my adult life there. And then decided several years ago that I was sick of wintertime and snow. So I made the trek out here to Vegas, I had been visiting out here, whether on vacation or for some other reason, three or four times and I never really wanted to take the flight back home because I knew what I was going to run into, especially in the wintertime digging my car out of an airport parking lot, which is never a fun thing in the Northeast. Anybody from there knows exactly what I'm talking about. So I moved out here to Vegas in 2016 and never regretted it and love it out here. Even in 115-degree heat. I'll take that over a blizzard every day of the week and have been loving it and really appreciate the opportunity Christian.

Q: Why did you settle in Las Vegas of all the warmer climates?

Transue: It's a party town. I enjoy having fun in an adult sense, like some many other people do, you know, an adult beverage here and there. Go into a casino and making a donation as we call it out here. We call the donation because you're you're helping pay the state's bills. So any of you who have done that, thank you very much. And it's just a it's just a really nice area. The Vegas area has grown even since I've been out here, but it's grown exponentially even before I moved out here. And we now have about a million people and they're projecting another 500,000 Over the next several years. So it's a large city now it's not on the pace of Phoenix yet but it's a large city. There's a lot to do obviously no shortage of no shortage of things to do up at Lake Mead on the weekends. And it's just a nice it's just nice part of the country.

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November 1, 2023

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