Should the Internal Revenue Service regulate the tens of millions of uncertified, paid tax preparers who operate in the United States?
The Government Accountability Office said in a report this month that those tax-filing experts, who account for 55 percent of all paid preparers, have put their clients at risk of serious enforcement action with incorrect returns.
The congressional watchdog agency reviewed 19 tax preparers through undercover site visits, finding that all but two had incorrectly calculated refund amounts. Among the most common errors: Claiming ineligible children for the Earned Income Tax Credit, not reporting cash tips and not asking the required eligibility questions for a tax credit that helps students cover educational costs in exchange for community service.
The GAO recommended that Congress consider legislation that would allow the IRS to regulate paid tax-filing experts, saying the move “will help promote high-quality services from paid preparers, will improve voluntary compliance, and will foster taxpayer confidence in the fairness of the tax system.”
The IRS tried to impose testing and education requirements for preparers in 2010, but a federal court determined that the agency lacked the statutory authority to carry out its plans. The U.S. Court of Appeals for the District of Columbia affirmed that ruling in February.
President Obama’s 2015 budget proposal calls for legislation that would allow the Treasury Department and IRS to regulate all paid tax preparers.
The GAO found that Oregon, one of only four states that regulate tax-filing experts, had a higher level of accuracy than the rest of the nation on returns. The odds of a paid preparer from the Beaver State filing an accurate return were 72 percent higher than in the rest of the country, the report said.
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