Taxpayers are Legally Responsible for Contents of Tax Return – Tighter Regulation on the Way
Wallingford, CT - February 9, 2010 – Connecticut Better Business Bureau is reminding consumers that they are legally responsible for whatever is on their tax return, even if the tax preparer made a mistake or claimed a questionable deduction.
The Internal Revenue Service (IRS) estimates more than 60 percent of Americans pay someone else to do their income tax returns, however taxpayers – not tax preparers- are responsible for ensuring all information contained in income tax returns is accurate and that supporting documents are included with the return.
In 2008, the Treasury’s Inspector general set up a sting operation, in which auditors posed as taxpayers to evaluate services provided by income tax preparation companies.
Results of their investigation were a sobering wake-up call for taxpayers who entrust their tax returns to somebody else without checking their qualifications. The auditors reported only sixty percent of returns they submitted had accurately itemized deductions.
Next year the IRS will require income tax preparers to register with the government and pass a competency test. Such regulations governing tax preparers exist in only three states: Maryland, California and Ohio.
Connecticut Better Business Bureau President, Paulette Scarpetti, says BBB urges taxpayers to look for qualified, dependable and trustworthy preparers to avoid problems after filing of income tax returns.
“Consumers must ensure the accuracy of their returns and determine what services a tax preparer will provide in case the IRS finds a problem with a return and whether those services will be provided free of charge.”
Connecticut Better Business Bureau offers the following tips for consumers looking for a tax preparer:
Check their reputation: Better Business Bureau Reliability Reports provide information on the track record of tax preparers at www.bbb.org. Consumers however, also may select a preparer or preparation service from BBB’s accredited business directory.
Ask about qualifications: Only licensed preparers may represent you before the IRS if there is a problem involving the tax return, so ask about their training and licensing, whether they are members of a professional organization with a code of ethics and continuing education requirements.
What happens if there is a problem? Since taxpayers bear ultimate responsibility for their tax returns, ask whether the preparer guarantees the accuracy of their work, will amend the return free of charge if there is a mistake and cover any penalties imposed if the fines are the result of the preparer’s mistake.
Ask for an estimate of the preparation fee: The fee should be based on the complexity of a tax return – not a percentage of any refund. If you feel the price of a simple return is too high, ask why.
Ensure the tax preparer signs the completed return, provides a copy of it and a payment receipt for record-keeping. Review the paperwork before signing it and if you have any questions, ask for clarification.
Finally, ask the preparer to submit your income tax return electronically and set-up direct deposit for the refund. Taxpayers who e-file a return often receive a refund in eight to 15 days.