93% of Tax Returns by Preparers Had Errors, Study Finds

Before you go, we thought you'd like these...
Before you go close icon
US Tax Day
flickr Editorial/Getty Images
Only two of 29 tax preparers tested by mystery shoppers prepared accurate returns, the National Consumer Law Center said on Thursday.

The implications are serious, the group said, given that more than 70 million taxpayers pay tax preparers to do their income tax returns. The other groups that participated in the study were the Florida Alliance for Consumer Protection and Reinvestment Partners in North Carolina.

"To see this level of errors is extremely disturbing," Chi Chi Wu, staff attorney at the National Consumer Law Center, said in a statement. "A tax return may be the most important financial document for an American consumer during the year, and consumers who use paid preparers are placing their financial well-being in the preparers' hands."

This isn't the first time tax preparers flunked such an examination. The Government Accountability Office last year did a limited test and found that only two of 19 tax preparers the agency tested came up with accurate refund amounts.

Minimal Standards for Preparers

This isn't the first time that tax preparers flunked such an examination. The Government Accountability Office last year did a limited test and found that only two of 19 tax prepares the agency tested came up with accurate refund amounts.

It's a major issue, the NCLC said, is that just about anyone can put out a shingle and say they are a tax preparer. There are virtually no standards.

Only Maryland, Oregon, California and New York have rules that establish a minimum level of education, training or competence, the NCLC said. Amelia O'Rourke-Owens, a community and economic development fellow at Reinvestment Partners, noted this irony: "All 50 states regulate hairdressers, but only four regulate tax preparers."

The test tax returns involved returns prepared for either a single parent or for a graduate student, the NCLC said. Most preparers botched the single parent scenario by not properly accounting for the amount of time spent with the other parent as well as omitting side income that should have been reported.

Of 14 tax preparers given the graduate student scenario, 10 failed to use the right form to record income. And of the four who used the right form, three played fast and loose with deductions.

The groups advocate regulating tax preparers and establishing minimum standards.
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners