In March 2014, the federal government sent a mystery shopper with a simple and common type of tax filing requirements out to 19 randomly selected non-professional tax preparers in 10 different locations. The shopper did not visit any attorney or CPA tax preparers but focused on multi-location chain stores. This is what they found:
– Tax results among the 19 tax preparers varied by almost $3,800.
– Average refunds were roughly $500 more when using a paid preparer than self prepared returns.
– 3 of the 19 tax preparers used fake credentials.
– 6 of the 19 tax preparers violated rules that could subject them to tax preparer penalties.
– Only 2 of the 19 calculated the correct amount of tax.
The full GAO report is available here: GAO-14-467T, Paid Tax Return Preparers: In a Limited Study, Preparers Made Significant Errors
We observe that the majority of tax audit problems come from self-prepared tax returns but the data indicates that returns from non-credentialed tax preparers could also be a source of additional assessments.