According to the October 2008 Accounting Today magazine, you may want to think about who you are hiring to prepare your tax return.
"The Treasury Inspector General for Tax Administration (TIGTA) issued a report highlighting the failures of unenrolled preparers during the 2008 tax season. The TIGTA report, titled Most Tax Returns Prepared by a Limited Sample of Unenrolled Preparers Contained Significant Errors, was based on a sample of 28 returns prepared in February and March 2008 at 12 commercial chain and 16 small, independently owned tax preparation offices.
The auditors involved hired these tax preparers who were unaware of who the auditors were and what the real purpose was of the tax preparation. The review was performed in a large metropolitan city. All parties have been kept anonymous.
During the review, preparers correctly prepared 11 (39%) of the 28 returns. However, 17 tax returns (61%) were prepared incorrectly. All preparers in the study used commercial tax preparation software to prepare the tax returns.
Preparers did not prepare any of the six business tax returns correctly. They either added or increased deductions without the auditors' permission, and in some situations afer the auditors had questioned whether they were entitled to the deductions. The six preparers whose actions were considered willful or reckless prepared almost 1,000 tax returns during the 2008 filing season.
This study was done, to develop a program that would require all tax preparers to be registered." (Accounting Today, Vol 22 No 19)
When searching for a tax preparer, do your homework. Companies that brag about always getting you a refund, may cost you more in the long run if they are filing a fraudulent return. Even though small tax preparers may not charge much, if the return is prepared incorrectly, and the IRS charges you a penalty, plus interest, plus the additional tax, it's likely the preparer will not be able to reimburse you the penalty.
This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.
