Grassley Urges Caution When Using Paid Tax Preparers

Disturbed by what he heard at a hearing on taxpayer issues, Senator Charles Grassley, Chairman of the Senate Finance Committee, has issued a statement urging taxpayers to exercise caution when hiring a paid tax preparer.

Sen. Grassley’s caution comes after hearing from the General Accounting Office who estimated that over half of US taxpayers who overpay their taxes had employed the services of a paid tax preparer. In many cases, the overpayment was caused by using the standard deduction instead of itemizing deductions.

"Today’s findings are surprising," Grassley said. "I think most of us figure we’ll get the best possible financial outcome by having professionals do our taxes than by doing them ourselves. It’s counterintuitive that professionals actually could make us worse off."

"It’s shocking that paid preparers sometimes make very basic mistakes, like not advising folks to itemize instead of claiming the standard deduction. That seems like Tax Prep 101. Clearly taxpayers need to have their eyes open when choosing a tax preparer. And the IRS needs to increase its focus on the bad apple tax preparers as well."

In his statement, Sen. Grassley reminds taxpayers to follow the guidelines issued by the GAO on hiring a tax preparer:

  • When searching for a preparer, get recommendations from friends, co-workers, or other trusted people. Find out if you qualify for free services.

  • Interview the preparer before hiring to check out qualifications, experience, discipline problems, and any history of complaints.

  • Be sure you understand other services you will be getting, such as electronic filing or Refund Anticipation Loans. Find out whether these services are optional, what they will cost, and how they will benefit you.

  • Don’t hire a preparer who guarantees a refund before seeing your tax documents or whose fee is a percentage of your refund.

  • Make sure your preparer understands your personal circumstances, income, and expenses. Show your official tax documents to your preparer, including W-2s and 1099s.

  • Review your completed return before you sign it. Check that your tax information is correct. Even though someone else completed it, you are responsible for the accuracy of every item on your return.

  • Don’t sign a blank return and don’t sign in pencil. Make sure your preparer’s signature and tax identification number are on the return before you submit it. Keep a copy of the final return.

  • Don’t make checks for taxes due payable to preparers. Checks should be made payable to the United States Treasury.

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