Feb. 11, 2015
Tax time is often referred to as the “golden moment” for asset building and financial management due to the substantial infusion of resources many households receive in the form of tax refunds. For the tax preparation process to fulfill its potential as a delivery system for asset building resources, there need to be adequate protections in place to ensure its integrity. Yet, there is very little regulation and standardization in the tax preparation industry. Only a handful of states provide oversight for storefront paid tax preparers, and the federal government recently issued regulations requiring testing, registration, and continuing education, only to find them nullified following a court challenge and appeal.
Tax preparation by commercial paid preparers suffers from a lack of transparency and disclosure in the fees charged, resulting in a diversion of vital, earned public supports away from working families. Clients struggle tocompare and contrast prices and services or obtain information about the credentials of paid tax preparers. This brief focuses on the need for standards of preparation as well as price disclosure and transparency. In the final section, we highlight recommendations to improve the tax preparation process for those using paid tax services.