Chances are quite Good your Tax Preparer has no Idea what he is Doing
There are certain basic things we depend on to help ourselves get through life - the honesty and competence of doctors, lawyers, bankers and teachers. Well, you could add tax preparers to that list - even if most people find that difficult to believe. There was a review carried out by the Treasury Department to try and test the services tax preparers provide; they just found that about two out of three tax returns put together by any professional tax preparer, has a two-thirds chance of being incorrect. And when they are in fact incorrect, one out of three times, the mistake is intentional, to try to take advantage of you. That's right, those are thieves who set up legitimate looking business, to try to steal a little money when you come in the door. And it's not a small number either - nearly one in every five tax returns, are prepared by malafide thieves.
Outright fraud is not really unheard of in the area of personal financial services. People just find it hard to handle other people's money, and not take a piece for themselves. That's just human nature. You do get to read in the papers all the time how some certified public accountant or tax attorney is being sent away to serve jail time for fraud. A tax preparer just happens to be no different. Of course, they're not going to be shady acts you could recognize right off the bat. They can appear to be successful, a part of well-run organizations, and they can appear personally quite knowledgeable. But all this doesn't take away from how they can be real frauds.
Being a tax preparer does put one in a position where one can gain a lot by misrepresenting the law, and making false promises on what the law permits. For instance, some of them will guarantee you a much better IRS tax refund than you would personally know how. You would get them as promised too. But the IRS will pass its returns through an audit, and about a year after, you could get called up. In fact, a fraud who is good at his job could put that off for a couple of years. And he needs to be in business for two years, to make a huge killing in fees before he runs.
So, how does this happen? Doesn't a tax preparer have to be adequately qualified and certified by the IRS? They certainly do; they have to pass the tax exam, and they have to keep up with all of the IRS' qualifying rituals regularly. But there is a certain animal known as the "unenrolled tax preparer". And this one, needs no qualifications whatsoever. How do you recognize one? Certainly, you can ask to see credentials. But other than that, the moment any tax preparer begins to promise you great refund checks, even before they get to see your case, you probably understand that he is just trying to pull your chain. Any time a new tax deduction or "secret loophole" is promised to you, ask to see what section of the IRS code he gets that from. If you get a name and number, check it out on the Internet.
Most problems you see in the work that the tax preparer turns in, comes from not a desire to steal from you, but from simple ignorance. The IRS is studying the possibility that unenrolled tax errors be forbidden from doing professional work. If you are looking for anyone to blame, blame the way the government likes to overcomplicate everything. Why does the tax code have to be so complicated that no moderately sophisticated individual can make any sense of it? Why does everyone have to go to a professional to do a simple thing like work out their taxes?