Every spring, the average American grabs a shoebox jammed with slips of paper or a neatly organized file and goes to visit their tax preparer, usually a CPA firm or a franchised tax company. Others go to a person referred to by many CPAs as "the barber" - neither a CPA nor an accountant, but someone who, once a year, magically becomes a tax expert. It's a risk for the taxpayer and a revenue loss for the Internal Revenue Service.A cheap return becomes very expensive if it leads to an audit. The non-professional preparer does not sign off on the return, has no accountability for their work, and if anything goes wrong, the taxpayer is on their own.
IRS studies have shown that a significant number of these non-professional preparers do not report all of their earnings, as they are not licensed and their services are performed "off the books." Since they are not operating a business, they are not required to issue 1099 Forms in conjunction with paid professional services. Taxpayers lose again: There is no tax benefit for the payment of tax preparation or audit representation fees, unlike other entities that are permitted a full deduction.
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