Wednesday, April 05, 2006

Whose Fault Are Faulty Tax Returns?

A new study by the Government Accountability Office shows that commercial tax preparers, which seems to mean the storefront types versus individual CPAs, got 100% of tax returns wrong when the GAO went undercover to see how effective they were. The sample size was only 19 returns, of course, but nevertheless I suppose it's legitimate to guess that the numbers would be the same across all such preparers (well, maybe not the 100%--as soon as one preparer gets a return right that would blow the average).

The GAO wants consumers to be careful in how they choose tax preparers, which is good advice, but how about creating a tax code that isn't so complicated that we require professional tax preparers who can't even be trusted to get it right? How about making it possible for the average person to do their taxes without tearing out their hair?

There's a bad trend in this country toward forcing people to pay large sums of money to do things that common sense would tell you they should be able to do themselves.

Here's an example: this guy in Dallas set up a "fan" Web site about a local mall called the Shops at Willow Bend. He wasn't trying to make money from it or anything, just giving info about this new retail mall that he thinks is going to be cool. The mall developers come after him with their lawyers to shut down the site, and this guy doesn't like their hardball tactics, so he decides to fight them in court.

Problem is, he's not a lawyer and doesn't know how to file the myriad papers that a court of law requires for every single little maneuver that takes place, so he's flying blind, getting it wrong half the time and in danger of losing his case simply because he doesn't understand a process that the legal community has created to make it almost impossible to represent yourself in court.

I'm not against lawyers, and I certainly think using a lawyer in court would be smarter than not using a lawyer. But the fact that the legal system is set up in such a way that it is almost impossible to proceed without a lawyer (and they're not cheap if you haven't heard) is just plain wrong, just as a tax system that is so complicated that tax preparers themselves can't figure it out is wrong.

So the GAO can go to the Senate Finance Committee and smugly report their "a ha!" findings about tax preparers if they choose, but what they should be telling the Senate is that they've created a horrible system that forces people with no money to go sit in a storefront tax shop and pay someone to mess up their taxes a little less badly than they would mess them up if they did the taxes themselves.

I know, this blog is supposed to be about my credit card offers, but I can't help myself sometimes.


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