As I've mentioned on more than one occasion, tax season for me carries all the enjoyment of a two-hour MRI. True to form, this year was no different - exacerbated by the fact that the national payroll vendor that my wife's company employs was apparently unaware of the correct rate at which bonuses received in the state of Connecticut are to be taxed. As a result, you can imagine my surprise when my preparer delivered our completed returns. I couldn't have taken a Lear jet to get a refund.For chain tax preparers, the 2006 season hasn't been too cheery either. Last month the Government Accountability Office released a limited, but nevertheless troubling, study of myriad errors unearthed on federal returns.
The GAO sent undercover staffers to 19 offices of unidentified chain preparers in a major metropolitan area. I won't list all the errors the GAO found here, but several of them were glaring enough to have the investigative arm of Congress classify them as "serious." These ran the gamut from cash income disclosed by the investigator but not noted in the return, to discrepancies in child-care benefit deductions, not claiming all available deductions and overcharging a customer for having to redo a return.
I don't now nor have I ever used a chain preparer, but I know that many who do are satisfied with the quality of their work. And to be fair, had the GAO conducted a similar study on individual preparers, who's to say that they wouldn't have uncovered a similar frequency of errors?
However, with the GAO's study circulating around Capitol Hill and making headlines in the nation's consumer and business press, it has given new impetus to the licensure and registration of tax preparers.
As Senate Finance Committee chair Chuck Grassley, R-Iowa, pointed out, it seems incredible that you have to be licensed to cut hair, but not to prepare federal and state tax returns. Last year, Grassley and Sen. Max Baucus, D-Mont., co-sponsored S. 832, the Taxpayer Protection and Assistance Act of 2005, which includes a section titled "Regulation of Income Tax Preparers."
In essence, that portion of S. 832 would regulate, examine and require continuing education for return preparers. The bill places the responsibility of preparer regulation squarely on the Internal Revenue Service's Office of Professional Responsibility. Compliance failures would include non-monetary sanctions - suspension or, in a worst-case scenario, termination.
But an indication that this workflow may need to be tweaked a bit more is a recent report from the Treasury Inspector General for Tax Administration that charged that the OPR has done a below-average job in overseeing the tax practitioners it currently regulates, including CPAs, attorneys and enrolled agents.
For the public, one could argue that there would be little downside, save for the inevitable rise in preparation fees to cover the costs of licensure and registration.
But overall, it would seem to be more of a question of quality control. As it stands now, anyone can take out an ad in the Yellow Pages advertising themselves as a preparer, but not give a haircut.
But for the filer, the haircut might come at the hands of an unqualified preparer.
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