By Phillip Rawls
The Associated Press
January 23, 2009
A group that helps low-income Alabama residents sent undercover staff with recording devices to 13 commercial tax preparers across the state and says it found problems at each of them.
“The undercover review revealed that many commercial tax preparation companies confuse and abuse their customers with poor disclosures, high fees and costly miscalculations,” Stephen Black, president of Impact Alabama, said Thursday.
Impact Alabama is a student service organization that works with the Internal Revenue Service to train college students to prepare tax returns for low-income, working families for free. More than 350 students are doing that at 16 locations across the state this tax season.
Impact Alabama decided to duplicate studies that government agencies and the National Law Centerhave done in recent years, where people posing as taxpayers went to commercial tax preparation offices to get tax returns done.
Like those earlier studies, Black’s group found lots of problems even though the taxpayers had simple returns with nothing itemized.
In each scenario, ImpactAlabamastaff members used their W-2 tax forms and described themselves as parents with one or two children who lived with them less than six months of the year. For parents to claim the Earned Income Tax Credit, they must have a child more than half the year.
Eleven of the 13 tax preparers claimed the credit on the tax returns.
That does more than cheat the government, Black said. It can cause the other parent, who is rightfully entitled to the credit, to have a tax return held up for months until they can verify the children’s residence, he said. Then the parent who wrongly filed can be penalized, he said.
Ten preparers did not report outside income, eight didn’t report interest income, and 12 allowed the taxpayer to claim “head of household” status without being qualified for it.
Black said the taxpayers should not have qualified for a refund, but each tax preparer figured a refund, with amounts ranging from $65 to $6,247.
The offices visited ranged from independent storefront operations to national chains.
At an H&R Block office onGreen Springs AvenueinBirminghamand a Jackson Hewitt office inMontgomery, the preparers claimed the Earned Income Tax Credit and the head of household status. The H&R Block return called for a refund of $4,842, and the Jackson Hewitt refund was for $5,639, according to recorded transcriptions and tax returns released by Impact Alabama.
At Jackson Hewitt’s national headquarters, spokeswoman Kristen Sharkey said the company is reviewing the documents released by ImpactAlabama, but the company “is committed to providing accurate, quality tax preparation and the highest level of customer service.”
Nancy Mays, communications director for H&R Block, said the company has a “zero tolerance policy” for intentional misstatements or errors by tax preparers.
“We have already begun to investigate the situation and will take swift and decisive action,” she said.
The cost of the tax preparation services ranged from $80 to $402. The amounts varied within the same company. An H&R Block in westernBirminghamcharged $191, but the H&R Block onGreen Springs AvenueinBirminghamcharged $351, Black said.
