Where Are They Now?
It happens every tax season like clockwork. All of a sudden those empty retail storefronts are buzzing with new pop-up tax preparers with their animated mascots and lofty promises of big returns and low fees. Then, just as quickly as the majority of people have spent the last of that return money, the storefronts resume to empty spaces that no one gives a second glance. Where did these tax phantoms go? What if you need tax advice or have a question about your return?
According to the IRS, 81.2 million individuals use a paid tax preparer, and about 600,000 of preparers are unregulated by the IRS. In fact, the only states in the U.S. that regulate tax preparers are California, Oregon, Maryland, and New York. “The consequences of a bad tax return are much more serious than a bad haircut,” said Chi Chi Wu, staff attorney at the National Consumer Law Center (NCLC).
Pop-up storefront tax preparers are more than willing to provide services during tax season, but become a distant memory after April 15th. Unfortunately, these fly-by-night offices yield a high chance of committing fraud or submitting incorrect information on your behalf. A study published by the U.S. Government Accountability Office found that in 19 undercover site visits during the 2014 tax season, only two sites produced correct tax refund amounts.
Countless cases of cheating tax preparers have been reported across the country. These seasonal tax preparers set up in abandoned car lots, trailers, or even in their own home. In 2011, an advocacy group found that four out of nine individuals were encouraged to participate in tax fraud during several rounds of undercover testing. Most tax payers are unaware this illegal activity has been done on their behalf until they receive a letter from the IRS stating they owe thousands of dollars in interest and penalties.
It is important to do your due diligence as a business owner or individual filer to make sure you are using a professional, trusted, and certified accountant. The worst part about fraud is that you can’t do anything until after it happens. The best defense you have is to make an educated decision when choosing your tax preparer. In an effort to protect tax payers against fraud, the IRS has stated to offer programs to regulate tax preparers by requiring education courses and examinations, but participation is not mandated.
Using a Certified Public Accountant (CPA) for your taxes is a wise choice considering it is one of the single most important financial documents in your life. CPA’s offer the accountability and assurance that your taxes are handled with the highest level of expertise, and are in accordance with the most recent changes tax laws and regulations.