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Thursday, September 13, 2012

TIGTA: Tax Returns Prepared Through IRS's Volunteer Assistance Program had 51% Error Rate

TIGTA The Treasury Inspector General for Tax Administration yesterday released Ensuring the Quality Review Process Is Consistently Followed Remains a Problem for the Volunteer Program (2012-40-088):

The Volunteer Program provides no‑cost Federal tax return preparation and electronic filing to underserved segments of individual taxpayers, including low‑ to moderate‑income, elderly, disabled, and limited‑English‑proficient taxpayers. However, preparing accurate tax returns remains a challenge for the Volunteer Program. ... The accuracy rates of tax returns prepared for our auditors at IRS Volunteer Program sites increased from 39% in the 2011 Filing Season to 49% in the 2012 Filing Season. Three of 16 tax topics tested contributed the most errors—the deductions for Educator Expenses, IRA contributions, and small business expenses.

http://taxprof.typepad.com/taxprof_blog/2012/09/tigta-tax-returns.html

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Comments

In other news, sometimes you get what you pay for.

Posted by: the real anon | Sep 13, 2012 9:24:57 AM

I was a VITA volunteer once in college and I can understand how the error rate could be so high. I would like to know how that error rate compares to professional tax preparers though.

Posted by: Steve Webster | Sep 13, 2012 2:19:27 PM

I agree with Steve--I wonder how this error rate compares to other preparers. Didn't one of the financial magazines do a study that took the same basic data to multiple preparers, with almost every preparer coming up with a different Form 1040 result? That would seem to suggest that the rate of error is pretty high across the board.

Posted by: Anon | Sep 13, 2012 5:19:34 PM

Full Disclosure - I'm a Tax-Aide volunteer that falls under this umbrella. Without having read the report (I will) I predict that there were two scenarios that were tested and one of them had near 100% accuracy and the other near 0%. That's what happened a few years ago.

And of the one that had near 0%, the answer couldn't be found in Pub 17, even though it was a "simple" question of dependency. Our IRS contact said they couldn't get 100% agreement in their office as to the correct interpretation.

Of course I'm biased, but my impression is so long as Tax-Aide preparers stay in-scope they're pretty darn good.

Posted by: Jay Wiedwald | Sep 14, 2012 1:42:01 AM

The tax code is a great big joke
Just rules that make no sense
I am an accountant for 50 years
and after all these years just say
throw the whole code in the trash
Have a system that people can understand so they know how to vote for or not and not what we have now that is insane.
The tax code has become a power grab by congress and the states.

Posted by: Bob | Sep 14, 2012 6:39:03 PM