Accounting News

Tuesday, September 25, 2012
Volunteer Tax Prepares Reviewed

The Treasury Inspector General for Tax Administration (TIGTA) completed a review of the tax returns prepared by the IRS's Volunteer Program. The program provides tax preparation for low income, elderly, disabled and foreign language speakers and no charge. The report was trying to determine the accuracy of the returns prepared by the volunteers.

 The TIGTA tested 16 areas for accuracy. Their report found that 49% of the returns were filed correctly based on their review. There were a few areas that lead to a majority of the errors. These were Educator Expenses, Individual Retirement Arrangement contributions, and small business expenses.

This report is a dramatically different than the 92% accuracy rate that the IRS gave its own program. In addition the IRS performs anonymous visits of the preparation locations. Of these they found a 60% accuracy rate. This conflicting data calls into question the accuracy rate derived from the computer sample.

One of the problems is the difficult of some of the returns filed. The program is set up to help tax payers with a standard return using intake sheets designed for the program. When this is what is used then the accuracy goes up. However, in an effort to be helpful some volunteer tax prepares tried to "shoe horn" information into the intake sheets for more complex tax issues.

The TIGTA recommends that the volunteers spend more time going over the intake sheets to make sure that the returns are filed correctly. A step that would also help would be to refer filers who do not fit the sheets to tax professionals. This may cost the filer but is the best way to provide and accurate return. The volunteers will not be there for the individual if the return is audited in the future. The cost for representation for the audit will far outpace the cost of doing the work correctly in the first place.

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