According to a BBB study, nearly one-third of complaints against tax preparation companies allege that the preparer made an error or mistake in their tax return, resulting in the consumer having to pay fines or added fees to rectify the problem.
"Few things are as certain as death and taxes, and it's also true that few things are as scary—that's why more than half of the 120 million American taxpayers enlist the help of a tax preparer every year," said Kathleen Calligan, President and CEO of the BBB serving Middle Tennessee and Southern Kentucky. "However, consumers end up being held responsible when their tax preparer makes mistakes or errors on their return.
This can mean fees and fines adding up to thousands of dollars that they owe the government."Mistakes and errors are the most common complaint category against tax preparers. Approximately 20 percent of complaints allege that the tax preparer was simply unresponsive. Typically, the tax preparer did not return repeated calls or attempts by the complainant to receive assistance. Many complainants noted that they felt frantic as they faced filing deadlines or audits, and were not receiving any help from their tax preparer.
Disputes over billing accounted for 19 percent of complaints to the BBB. Typically, consumers were shocked when they received a high bill for having their taxes prepared or felt that they did not receive the level of service they paid for.
Almost 7 percent of complainants say the tax preparation company was rude, and 6 percent of complainants say they didn't receive their refund. The most disturbing finding may be that 6.3 percent of complainants allege that the tax preparer never filed their tax return at all.
"Consumers looking for trustworthy help filing their taxes should not wait until the last minute—they need to take their time, shop around and find a preparer who is both qualified and has a strong track record of providing customer service, " added Calligan. "Some consumers who rushed through the process in 2007 are still dealing with the mess their tax preparer made as they head into the 2008 tax season."
From 2005-2007, the Internal Revenue Service (IRS) opened nearly 700 investigations against tax preparers.
In April 2006, the Government Accountability Office issued findings from a limited study of commercial tax preparation chains in major metropolitan areas, noting all of the returns completed in those offices were wrong in one way or another. The report cited mistakes such as: not reporting business income, failing to take the most advantageous education tax benefit, failing to itemize deductions, and, in some cases, failing to claim available deductions.
The BBB wants to warn consumers that when the IRS detects a false return, the taxpayer, not the tax preparer, must pay any additional taxes as well as any other associated interest, fees and penalties. The taxpayer is responsible for all information submitted to the IRS.
Many tax preparers provide quality services to their clients, but the BBB encourages consumers to use the same caution in selecting tax preparation help as they do when they select other professional services such as doctors or lawyers.
Your BBB offers the following advice when searching for help with taxes:
Ask around. Get referrals from friends and family on who they use, and get a free reliability report on a tax preparation business from your local BBB at www.bbb.org.
Look for credentials. Ideally, tax preparers should either be a certified public accountant, a tax attorney or an enrolled agent. All three can represent taxpayers before the IRS in all matters, including an audit. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics.
Don't fall for the promise of a big refund. Be wary of any tax preparation businesses that promise larger refunds than the competition, and avoid tax preparers who base their fee on a percentage of your refund.Think about accessibility. Many tax preparation services only set up shop for the months leading up to April 15th. In case the IRS finds errors, or in case of an audit, consumers need to be able to contact their tax preparer throughout the year.
Read the contract and know what you're paying for. Consumers should read tax preparation service contracts closely to ensure they understand issues such as how much the service costs, how more complicated preparations will affect the cost, and whether the tax preparer will represent the consumer in case of an audit.
The BBB of Nashville was founded in 1961 as a non-profit Tennessee organization serving 38 counties in Middle Tennessee and 7 counties in Southern Kentucky. The first BBB was founded in 1912. Today, BBBs serve communities across the U.S. and Canada.
Serving as the 'ethical gatepost' of our communities, BBB fosters and promotes ethical business practices and self-regulation standards that build consumer trust in the marketplace. BBB services include business reliability information, complaint resolution services and consumer and business educational information. In 2007 BBB Nashville handled over 3.2 million services requests via our web site www.Nashville.BBB.org .