Mystery Shoppers

A number of years ago, a former colleague of mine was heard singing the repeated praises of his tax preparer.

When I asked him why the over the top endorsement - in a slightly off-key tenor I might add- he simply replied, “you should see the refund he got me.”

Hmm.

If you gauge a preparer’s competence on the amount of a refund, then yeah, I understand why he/she would hold a special place in a taxpayer’s heart. But I don’t think I need to explain that receiving a large refund does nothing to validate a preparer’s competence.

Recently, Bloomberg published a feature on how mystery “shoppers” have been visiting tax preparation offices across the country to judge the quality of their work and the results have been shall we say, eye-opening.

An example: A preparer in New Mexico had to ask their supervisor how to round a number to the nearest whole dollar.

Now I urge you to re-read that again for emphasis. This is someone you’re entrusting with your taxes and putting you at high risk for an audit.

Another preparer forgot to include the client’s daughter as a dependent even though the daughter was sitting next to the parents at the session.

In another case in Florida, the accountant deducted car expenses even though the client did not own a car.

Trust me I can’t make this stuff up.

Apparently, last year, the National Consumer Law Center tested some 29 tax prep offices and found only TWO forms completed correctly. Add to that just 19 preparers chosen randomly by the Government Accountability Office calculated the correct refund amount in 2014.

One GAO tester was told by a preparer that income didn’t need to be reported to the Internal Revenue Service if it was reinvested in a mutual fund.

Now why didn’t Rocco, my accountant, ever think of that?

At the heart of the problem is that almost anyone can claim to be a preparer – all they need is a preparer identification number which retails for $50 with the IRS. You don’t have to be a credentialed CPA or tax attorney (LLM).

Over recent years there has been a big push to require certification for preparers, but much like tax reform itself, the movement has been largely glacial in pace.

Naturally, I hope Rocco gets me a refund this year.

But large or small, I’m fairly certain he won’t take a deduction for a yacht I don’t own or ask me how to round to the nearest dollar.