For many people, the process of filing an income tax return is daunting. Tax laws change frequently, and many individuals and business owners are simply unaware of the myriad of rules that govern deductions, credits and reportable income. As a result, the average taxpayer may make mistakes that can result in the underpayment or overpayment of taxes. If the taxpayer underpays his taxes, he may be subject to an IRS audit, with possible penalties. If the taxpayer overpays his taxes, he loses money that's rightfully his.
A tax consultancy is a business that provides expert advice to tax filers. A good tax consultant understands tax laws and is able to advise strategies that minimize obligations while also reducing the chance of an audit that could lead to a conflict with the IRS or with a state tax agency. In addition, tax consultants can prepare tax returns and other documents on behalf of their clients.