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What Drives The Cost of Tax Preparation? - YouTube
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what drives the cost of tax preparation
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happy tax season everybody we are right
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in the thick of it so here are some
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resources for today's show there's a
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couple good articles in here one from
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2017 well and I'll touch on these in in
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a couple minutes here also the link to
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my website and to the recording of this
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YouTube live presentation the slide show
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for this will be saved out on Google
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slides and also in slideshow so by all
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means feel free to go and pick those up
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and you'll be able to get the live links
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there as well as in the show notes below
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this video so taxes this this little
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picture here I thought was kind of funny
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as I was digging through some pictures
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to put in the slide deck it says IRS
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intimidation retaliation service I don't
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know why there's a weird border on this
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but I thought the the image was funny
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nonetheless so let's connect Kristen
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better way CPA comm 843 608 go to
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ninety-eight Facebook LinkedIn Twitter
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Quorra where I post every single day
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Instagram and Pinterest tell me CPA is
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do you know are out on Pinterest good
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question right yeah I didn't even know
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that I was on Pinterest until just a
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little while ago my marketing folks have
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me up with that so kudos Tim you
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have any questions by all means please
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ask away
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so what's up everybody my name is Chris
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Harvey Sean with sore a better way CPA
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and I'm gonna be walking you through
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this little this little problemo here
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today and basically the problem is you
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have to file a tax return every single
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year the question that you have is
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should you use a tax software should you
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use a free tax software if so should you
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go to a tax preparer the fees between
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the free tax preparation software and a
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you know go into a CPA the they've very
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widely widely right so you know what's
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the difference what drives those prices
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well we're going to talk about that
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today there are three things the drive
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those I'm going to cover so number one
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cheaper labor and if you've ever seen
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them
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Napoleon Dynamite where he goes to work
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the chicken farm and then the guy pays
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him in cash he's like I forgot my
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checkbook and then he goes home counts
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as change he goes six bucks it's like a
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dollar an hour
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well cheaper labor obviously is one way
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to drive down the cost of your product
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or service right so preparing tax
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returns is you know the same thing so
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the company that prepares your tax
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return they need to make money to to
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stay in business and feed their families
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well one way that they can drive up
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their margins is is to cut their cost
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but also cut their input costs and input
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cost being labor and tax software as
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well but labor is the biggest one there
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so cheaper labor that's always one way
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to cut cost right okay number two spend
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less time on your tax return now what
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does that mean well it's effectively
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cutting the cost of your labor you're
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just turning out more tax returns every
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hour every day you know you can pay a
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little bit more of a wage but you expect
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those people to produce more right so
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spend less time on your particular tax
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return now what does that look like well
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I had a client that came to me from a
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big-box retail store they said there's a
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couple weeks ago they said Chris you
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know this this tax bill looks ridiculous
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is like $18,000 in a total tax bill I
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said well let me take a look at it and
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you know when she started digging you
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asked some questions and you asked for
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some additional documentation and then
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you know you look through the tax law
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and you apply the applicable tax loss to
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their situation based on the facts and
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circumstances and a lot of you know a
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lot of instances you can drive down that
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tax bill right so long story short we
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were able to take that $18,000 our tax
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bill that they were given by the big-box
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retail folks and turn that into loan
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into a $1,900 refund and that was based
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on just one thing on how the treatment
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of the sale of our home was being
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treated but if you've got to turn out
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you know excellent number of tax returns
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per day or X number of tax returns per
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hour you don't have the time to ask
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people the questions that are meaningful
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and to go and take their answers and
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take their fact pattern and go and
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research in the tax code you know how
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that how the tax code can impact them
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and their facts and circumstances so
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that's another way to decrease costs
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okay number three this is my favorite so
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you become the product think about face
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book and face
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but you are the product tax prep free
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are free tax prep software same thing
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right so the the company is going to
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either take is going to take your data
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and they're gonna sell it and or they're
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gonna upsell you it's a good example of
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that I had a new client come to me last
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week I said hey I'd like to take a look
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at your 2017 tax return to see you know
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what's going on there see if there's
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anything that I should be concerned
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about that should carry forward to 2018
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stuff like that she said okay well I
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used TurboTax last year let me go fetch
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my tax return she comes back she says
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TurboTax is her is TurboTax free is
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holding my return hostage they want me
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to pay money for it and I'm not gonna do
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that
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that's okay well that's your choice but
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that's a good example
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now there's millions of people using
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these free tax softwares we're gonna
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have to go back and pay for their tax
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returns later so a good example two
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years from now you know you want to go
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buy a house the mortgage lender is gonna
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say hey we want to look at your last
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three years of tax returns and you're
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gonna say well you know there aren't our
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attacks let me go get it well you're
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gonna have to go pay for those and you
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know whether or not you want to do that
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later
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that's the upsell right that's up to you
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so those are pretty much the three ways
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that the tax return prep can be or the
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cost of tax return prep can be driven
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down right it's it's basically a race to
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zero right now
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and when you get to zero you turn into
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into the product not the tax return
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right so the role is totally flipped so
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a couple of final thoughts and these are
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my Jack Handey deep deep thoughts right
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and you know I'm dating myself and Jack
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Andy was an awesome skip that either
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used to do on Saturday live that I miss
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very much so when your text and prayer
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has to rush through your file they're
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less likely to do research on your
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behalf they're less like that I asked
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you four questions to ask you questions
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that may drive down your tax liability
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do research ask you for additional
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documents those sorts of things
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they think they can't they just don't
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have the time and they basically have to
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rush through your file so that's one of
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the way that they can drive down the
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cost there's always going to be a place
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for a live tax preparer I think now this
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is one of the conversations that's going
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on in the profession right now but at
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the end of the day humans are social
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beings humans want to interact with
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other humans I've got
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tons of clients coming to me saying hey
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I used TurboTax last year I'm not sure
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if I did it right I'm not sure if I did
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it right the year before and I just want
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some certainty around my tax situation
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because really everybody is deathly
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afraid of the IRS they want nothing to
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do with the IRS they don't want to get
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correspondence from the IRS they don't
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let the IRS agent in the show up at
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their house none of that and so you know
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they want that peace of mind and they
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also want on social interaction with
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their CPA where they can just pick up
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the phone and ask them questions asking
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questions you know while they're going
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through the interview process to prepare
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the tax return things like that people
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want to talk to a live human being and
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in general I think you're gonna see this
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with a lot of different products and
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services over time we're going to see
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the shift away from the robot you know
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automated type interaction that we're
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seeing so much up now into back into I
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should say that human interaction that's
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going to become more important right and
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then number three this is the biggest
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one right now so issues around data
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privacy they're not gonna go away and
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they're becoming exacerbated because one
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of the hard trends that we're seeing in
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the world today a hard trend being a
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future fact is that there's more data
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everything is generating data your
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refrigerator is generating data data
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your washing machine is generating data
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your fellow generating data you're
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generating data every application that
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you use a generating data there's tons
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and tons and tons and tons of data right
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and we saw this try to be addressed with
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gdpr in the European Union last year and
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you know there's been talk ever since
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that the u.s. is gonna move to something
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similar if not complementary and so it's
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something that companies are thinking
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about something that governments are
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thinking about data is a big issue right
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on a lot of different fronts and you
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know finally one thing I'll mention is
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what RP you know society as a whole what
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are they gonna think when their tax
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return data is married with our Facebook
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data which is married with their Alexa
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data because Alexa is recording you in
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your house right and this is kind of
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very big brother-ish but you know is
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society really gonna want their tax
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return data being out there and being
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used you know to be marketed to or to be
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sold to or anything like that you know I
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just I don't I don't know so long story
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short you know be careful when using
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free services
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because that is your data right you own
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that you should own that you should want
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him that into the future and I think
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there's gonna be a place for live tax
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return preparers in the future so those
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are my final thoughts about that anyway
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let's connect Christa better way she
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baked on eight four three six oh eight
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oh two nine eight that's the phone
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number Facebook LinkedIn Twitter Quora
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Instagram and Pinterest feel free to
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reach out to me on all those platforms I
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am active and and out there you can find
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me if if you want to right that's it for
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me this week I will look forward to
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speaking to you next time
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