Tax Prep Chains Hear Harsh Words from Top Tax Senators

Senate Finance Chair Charles Grassley (R-IA) and Minority Leader Max Baucus (D-MT) scorched major tax preparation chains (H R Block?, Jackson Hewitt?) after a GAO audit discovered widespread errors and potential fraud. The undercover audit involved 19 offices in an undisclosed major city and found that almost all were not only incorrect, but came with bad tax advice. The range of errors ranged from producing a errant $2,000 "overpayment" to a $1,500 "underpayment". A major concern was that 10 of the 19 outlets did not report business income. The GAO's caution about not extending the results of the audit beyond the city audited was ignored by Baucus, who stated that millions of returns mailed to the IRS may not be worth the paper that they were written on. Grassley also piled on, wondering why tax preparation businesses could be unregulated and stating that taxpayers should (but implying may not) be able to trust the advice of tax preparers.

It will be interesting to see how the tax blogging community addresses this issue in the next day or two. Some initial thoughts: H R Block really did not need this implication on top of other recent legal problems; the Senators MIGHT have been premature in their comments since other cities were not reviewed and the movement to specify ethics as part of state requirements for annual CPE seems to get buttressed by this audit.

A second link to the findings at Web CPA (http://www.webcpa.com/article.cfm?articleid=19828) includes a link to the full GAO report.

Update: Fellow Iowan Joe Kristen (http://www.rothcpa.com/archives/001801.php) clearly believes that Senator Grassley WAS premature in his comments.