Government watchdog finds cause for further inquiry into tax prep industry.
From GAO Report
In GAO visits to commercial preparers, paid preparers often prepared returns that were incorrect, with tax consequences that were sometimes significant. Their work resulted in unwarranted extra refunds of up to almost $2,000 in 5 instances, while in 2 cases they cost the taxpayer over $1,500.
Some of the most serious problems involved preparers:
? not reporting business income in 10 of 19 cases;
? not asking about where a child lived or ignoring GAO?s answer to the question and, therefore, claiming an ineligible child for the EIC in 5 out of the 10 applicable cases;
? failing to take the most advantageous postsecondary education tax benefit in 3 out of the 9 applicable cases; and
? failing to itemize deductions at all or failing to claim all available deductions in 7 out of the 9 applicable cases.
GAO discussed these findings with IRS and referred to it problems that were found. Had these problems been discovered by IRS on real returns, IRS officials said that many of the preparers would have been subject to penalties for such things as negligence and willful or reckless disregard of tax rules.