Tuesday, February 17, 2009
THE ISSUE: The state Senate passed a bill that would help ensure Alabamians get competent service when they pay someone to prepare their tax returns. The House should follow suit.
Too much of the time, it’s easy to gripe about gridlock in Alabama’s Senate, and how it stands in the way of good legislation and sometimes just the routine business of government.
But not this time. The Senate quickly and commendably passed legislation that would help guard Alabama taxpayers from a portion of the tax-preparation industry that is unregulated and sometimes unscrupulous. The Senate’s 25-0 vote on Thursday puts the ball in the House of Representatives’ court.
Let’s hope the House does the right thing and follows the Senate’s example. The measure offers much-needed protection for Alabamians, and especially less wealthy Alabamians who overwhelmingly rely on seasonal, storefront businesses to compute their income tax returns. It is being pushed by Impact Alabama, a nonprofit group that helps provide free tax preparation services to low-income families.
The group recently conducted an investigation that uncovered serious problems in the commercial tax-preparation industry. Returns prepared for 13 undercover taxpayers included errors and outright fiction, particularly in the area of the Earned Income Tax Credit. In addition, the charges for preparing returns were arbitrary, and the details about costly auxiliary products like refund-anticipation loans weren’t adequately explained.
The bill passed by the Senate would require the disclosure of all costs on those loans. Moreover, the bill would create the Alabama Board of Individual Tax Preparers, which would test and license those in the income-tax business who aren’t otherwise regulated. The preparers falling under the new board would be required every year to pay an $80 fee and get updated training.
It’s a good idea, and it’s already being done in three states: Oregon, Maryland and California. Alabama should be next. Heck, in our view, a version of this bill should be in place in every state considering the advantages it offers taxpayers and governments. Sloppy and fraudulent tax returns are a burden on them, too.
That’s why the Alabama bill got input and backing from state Revenue Commissioner Tim Russell, and it’s surely part of the reason the Senate passed it with support from both parties and, indeed, without a single dissenting vote. But the most compelling reason for the legislation is the protections it provides taxpayers.
As the measure moves to the House of Representatives, members in that body need to jump at the chance to provide taxpayers a different kind of relief – relief from incompetent and predatory tax services.
