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Tax preparers may now need a license

An H&R Block tax office in San Francisco.

TEXT OF STORY

Kai Ryssdal: Don't know about you, but by far the biggest check my wife and I wrote this year was to the Internal Revenue Service. I'll spare you the details, but I'd bet my experience isn't unique. For a lot of us, paying taxes is one of our larger transactions. Which is why it's disquieting to learn that most paid tax preparers out there are unlicensed and completely unregulated. Marketplace's Steve Henn reports.


STEVE HENN: If you walk in to an office of a big chain that prepares taxes, chances are you are not going to sit down across from a CPA -- a tax attorney -- or even a licensed tax preparer.

MICHAEL BROSTEK: Most of the paid preparers that would be in store fronts for instance during the tax season are not regulated by anyone.

Michael Brostek works at the Government Accountability Office. Brooke Millington runs her own tax preparation firm.

HENN: But to do what you are doing now and to start you business, you didn't have to pass any tests.

BROOKE Millington: No, I could've just opened up a store front and said I'll do your taxes, I could've done it from my home, I could've set up a booth on the street.

Millington says the quality of some tax services out there is atrocious.

MILLINGTON: I hear a lot of stories.

Brostek was hearing stories, too, so the GAO went undercover to test the accuracy of tax preparation services. They went into 19 store fronts and...

BROSTEK: Everybody made at least one error.

Some made big ones worth thousands of dollars.

DOUG SHULMAN: I think this is incredibly important.

Doug Shulman runs the IRS.

SHULMAN: When people pay good money they shouldn't get bad advice.

So Shulman told members of Congress today that the IRS is going to propose new standards for tax preparers by the end of the year. Brostek at the GAO says in Oregon preparers already have to take a simple test before they can set up shop. He says returns there are more accurate and that saves the Feds roughly $390 million a year in that state alone.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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