Testimony 

Before the Senate Finance Committee

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. EST 

Tuesday, April 1, 2003 PAID TAX PREPARERS

Most Taxpayers Believe 

They Benefit, but Some Are 

Poorly Served 

Statement of James R. White 

Director, Tax Issues 

GAO-03-610T 
Based on our on-going work, most taxpayers believe they benefit by using a 

paid tax preparer. According to the results of our nationwide survey, 77 

percent of taxpayers said they were very or generally confident that their 

preparer completed a tax return that allowed them to pay no more in taxes 

than was legally required. In addition, the survey showed that 87 percent of 

taxpayers would use a paid preparer in the future. Despite these facts, 

taxpayers may not understand the tax laws well enough to accurately assess 

their preparers’ performance. To provide quality service, paid preparers 

must probe the personal circumstances that could affect the amount of tax 

their clients owe, such as whether the taxpayers have dependents. For 

example, one taxpayer took 3 years of prior returns prepared by a friend to a 

tax preparer. The preparer found that the taxpayer had overpaid his taxes by 

more than $6,200 because he had overlooked earned income and child tax 

credits. 

While most taxpayers expressed confidence in their paid preparers, our 

survey, studies of filed returns, and interviews with knowledgeable 

observers suggest that a small percent of taxpayers are poorly served due to 

problem performance by preparers. For example, GAO’s survey results 

indicated that 5 percent of all taxpayers had no confidence that they had not 

overpaid their taxes. However, even a small percentage of the more than 71 

million users of paid preparers in 2000 can translate into millions of affected 

taxpayers. Preparers who fail to adequately probe, provide questionable 

advice, or engage in fraudulent practices can cause serious adverse 

consequences for their clients. For example, one taxpayer overpaid his taxes 

for several years by about $3,500 to $5,000, despite receiving notices from 

the Internal Revenue Service that he may be eligible for the earned income 

tax credit. When he showed these notices to his paid preparer, the preparer 

took no action. 

Paid preparers are not always the cause of problems—taxpayers can provide 

preparers inaccurate or incomplete information. Despite using a preparer, 

taxpayers are still ultimately responsible for the accuracy of their return. 

Paid Preparer Users’ Confidence That They Did Not Overpay Their Taxes 

In tax year 2000, over half of 

individual filers paid someone to 

prepare their tax return. These 

taxpayers paid an estimated $14.7 

billion for individual return 

preparation. Despite the 

importance of paid preparers' role 

in the tax system, little data exist 

on the quality of the services they 

provide. In light of this, GAO 

surveyed and interviewed 

taxpayers and gathered examples 

of the range of outcomes 

experienced by taxpayers who 

used paid tax preparers. 

GAO is not recommending 

executive action. However, GAO 

identified guidance from various 

sources suggesting common sense 

steps taxpayers can take when 

choosing or working with a paid 

tax preparer, such as: 

 When searching for a preparer, 

obtain recommendations from 

people you trust. 

 Check out your preparer's 

qualifications. 

 Make sure you understand the 

services you will be getting, 

how much they cost, and how 

they will benefit you. 

 Make sure your preparer 

understands your personal 

circumstances and reviews 

your official tax documents. 

 Review your completed return 

before you sign it. 

www.gao.gov/cgi-bin/getrpt?GAO-03-610T.

To view the full testimony, including the scope 

and methodology, click on the link above. 

For more information, contact Jim White at 

(202) 512-5594 or WhiteJ@gao.gov. 

Highlights of GAO-03-610T, a testimony 

before the Senate Finance Committee. 

April 1, 2003

PAID TAX PREPARERS

Most Taxpayers Believe They Benefit, but 

Some Are Poorly Served 
Page 1 GAO-03-610T 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss our on-going study of paid tax 

preparers. The Internal Revenue Service (IRS) estimates that there were 

up to 1.2 million paid tax preparers in 1999. These paid preparers are 

important to taxpayers, as underscored by the fact that in tax year 2000, 

over half of the 130 million individual filers paid someone to prepare their 

tax return. Taxpayers paid an estimated $14.7 billion for individual return 

preparation. Numbers like these suggest that taxpayers believe that paid 

preparers provide a valuable service. 

Given the complexity of the tax code, it is easy to understand why so many 

taxpayers depend on the assistance of a paid preparer. The need for the 

assistance of a paid preparer, combined with the fact that our tax system 

relies on taxpayers accurately completing and filing their returns, means 

that paid preparers play a critical role in the functioning of the nation’s tax 

system. 

Despite the importance of paid preparers, minimal data exist on the quality 

of services they provide. However, there are indications that some 

preparers make errors on taxpayers’ returns that can result in taxpayers 

overpaying or underpaying their taxes. For example, last year we 

estimated that over 2 million taxpayers overpaid their 1998 taxes by $945 

million because they claimed the standard deduction when it would have 

been more beneficial to itemize .

1

 Half of these taxpayers used a paid 

preparer. While taxpayers undoubtedly contributed to some of these 

errors, these data raise questions about the extent of errors caused by paid 

preparers. 

In light of the importance of paid preparers to the functioning of our tax 

system and the lack of information about the quality of service they 

provide, you asked us to (1) obtain the views of taxpayers who used paid 

preparers and provide examples of paid preparer performance, including 

the type and what is known about the extent of problems caused by paid 

preparers and (2) identify common sense steps taxpayers can take to help 

ensure that they benefit from using a paid preparer. 

 1

Tax Deductions: Further Estimates of Taxpayers Who May Have Overpaid Federal 

Taxes by Not Itemizing (GAO-02-509, March 29, 2002). 
Page 2 GAO-03-610T 

My statement today is based primarily on a nationwide representative 

survey of taxpayers; in-depth interviews with a judgmental sample of 

taxpayers regarding their experiences with paid preparers; phone calls to a 

limited number of preparers in which we posed as potential clients asking 

about services and fees; interviews with large and small tax preparation 

firms, IRS’s National Taxpayer Advocate, IRS officials, and several tax 

clinics offering tax help to low income taxpayers; and a review of IRS’s 

closed case files on preparers investigated for fraud or other misconduct. 

Anyone can be a paid tax preparer. No laws or regulations limit who can 

sell tax preparation services. The types and training of paid preparers vary 

widely. They range from attorneys and certified public accountants (CPA) 

to preparers who are not licensed and have no formal training. 

Commercial preparers may hire any of these and may also provide their 

own training. However, IRS does place limits on paid preparers who can 

represent taxpayers in matters before IRS. Those representing taxpayers 

are collectively referred to as practioners and can be attorneys, CPAs, and 

enrolled agents—that is, former IRS employees or individuals tested in tax 

laws. All others are referred to as “unenrolled agents.” Practioners are 

governed by IRS Circular 230 regulations that prescribe standards of 

conduct and sanctions for violating the standards. 

In summary, our work to date shows a range of paid preparer 

performance: 

• Most taxpayers who used a paid preparer believe they benefit by doing 

so. In addition, most taxpayers reported that they did not pay more in 

taxes than was legally due and that their preparer knew enough about 

their personal tax situations to accurately prepare their returns. Paid 

preparers told us that asking probing questions about their clients’ 

personal circumstances or seeing documentation of income and 

potential deductions were important components of providing quality 

services. 

• However, some taxpayers using a paid preparer end up overpaying 

their taxes or preparer or underpaying their tax liability because some 

preparers did not adequately probe into or pay attention to taxpayers’ 

personal circumstances, made computational errors, provided 

questionable advice, or, in rare cases, engaged in fraudulent activities. 

Our work also shows that despite the use of paid preparers, taxpayers are 

ultimately responsible for the accuracy of their tax returns. Taxpayers can 

take some common sense steps to ensure they benefit from using a paid 
Page 3 GAO-03-610T 

preparer, including providing complete and accurate information to their 

paid preparers. 

Taxpayers choose to use paid preparers for a variety of reasons. Many of 

the taxpayers we spoke to told us they used a paid preparer because they 

did not understand the tax laws. One taxpayer, for example, said she 

began using a paid preparer 9 years ago to help her with estate tax issues 

following the death of her father. Other taxpayers said they lacked the 

time or patience to complete their return on their own. For example, a 

mother of four who operates her own business part-time and is finishing 

her degree at night said she simply does not have the time to do her own 

taxes. Other taxpayers stated that they paid someone to prepare their 

taxes in hopes of obtaining a larger and/or quicker refund. 

Most taxpayers who used a paid preparer believe they benefit from doing 

so. We estimate, based on our representative sample of taxpayers, that 77 

percent of taxpayers who used a paid preparer are very or generally 

confident that they did not pay more in taxes than was legally required, as 

shown in figure 1. In addition, based on our survey results, we estimate 

that 87 percent of taxpayers would use a paid preparer in the future. 

Figure 1: Paid Preparer Users’ Confidence That They Did Not Overpay Their Taxes 

Note: The estimates have a 95 percent confidence interval of plus or minus 5.23 percent or less. 

Most Taxpayers Are 

Confident They 

Benefit from Using 

Paid Preparers 

5%

Not at all confident

No opinion

Generally confident

Very confident

7%

A little confident 

Source: GAO Nationwide Survey of Taxpayers.

• •

27%

49%

12%

28%
Page 4 GAO-03-610T 

A word of caution about our survey: it reflects taxpayers’ perceptions and 

may overstate the quality of service paid preparers are providing. Most of 

the taxpayers we talked to in-depth said they used a paid preparer because 

they found IRS tax forms and documents too complicated or they were 

confronting an unusually complicated tax situation. Thus, the taxpayers in 

our survey may not understand the tax laws well enough to evaluate the 

performance of their paid preparers. Evidence that some taxpayers who 

used preparers overpaid or underpaid their taxes also suggests that 

taxpayers confronted by complicated IRS forms and a confusing tax code 

may be unable to identify errors made by preparers. For these reasons, the 

percentage of taxpayers who were confident they did not overpay their 

taxes may be overstated. There are no reliable data on the extent of the 

overstatement. 

Despite this caveat, paid preparers can benefit their clients in several 

ways. First, probing about taxpayers’ personal circumstances can help 

paid preparers ensure their clients do not overpay or underpay their taxes. 

Paid preparers told us they use a variety of techniques, including personal 

interviews and questionnaires, to get information about their clients’ 

dependents, mortgages, other deductible expenses, or asset sales. Some 

paid preparers maintained contact with their clients during the year, 

allowing them to become intimately aware of the financial issues facing 

their clients and to make meaningful suggestions to reduce future 

liabilities. Based on our survey results, taxpayers were very confident that 

their preparer did sufficient probing or took other steps to ensure an 

accurate return. We estimate that about 91 percent of taxpayers believe 

their preparers had enough information about their personal 

circumstances to accurately prepare their tax returns, as shown in 

figure 2. 

Paid preparers also can benefit their clients by reviewing income and 

expense documentation. To do this, most of the preparers we talked to 

said they ask their clients to provide documentation to support claimed 

income, deductions, and credits, such as W-2 forms from employers or 

1099 forms from financial institutions. Taxpayers in our survey confirmed 

that this is a common practice. We estimate that 88 percent of paid 

preparer users were asked for supporting documentation, as shown in 

figure 2. 
Page 5 GAO-03-610T 

Figure 2: Client Perceptions on Aspects of Paid Preparer Performance 

 Note: The estimates have a 95 percent confidence interval of plus or minus 5.23 percent or less. 

Another way paid preparers can benefit their clients is educating them 

about the tax laws. Such efforts can help ensure taxpayers neither overpay 

nor underpay their taxes and may promote overall compliance. For 

example, one preparer who works primarily with immigrants said he and 

his staff spend considerable time explaining to their clients that paying 

taxes is part of the civic responsibilities they assumed in immigrating to 

this country. Other preparers told us they often have to educate taxpayers 

on more complex concepts, such as computing the basis, or the 

investment made in a property for tax purposes, to determine how much 

of a real estate sale would be taxable. Another preparer told us he found 

that a taxpayer had overpaid his taxes by more than $6,200 over a 3-year 

period because the taxpayer had overlooked earned income and child tax 

credits. Still, another preparer told us he helped a taxpayer receive a 
Page 6 GAO-03-610T 

refund in excess of $19,000 when he found out that the taxpayer, who had 

moved twice in less than 2 years, had missed out on deductions for moving 

expenses due to job relocations. 

Paid preparers are also required by law to take certain steps when filling 

out returns for their clients, including signing the return and giving their 

clients copies of the completed returns. We estimate that a vast majority of 

paid preparers signed and provided their clients a copy of their return, as 

shown in figure 2. 

A variety of evidence shows that some taxpayers are poorly served by 

their paid preparers. The available evidence does not allow a precise 

estimate of the percentage of taxpayers affected, but none of it suggests 

that the percentage is large. However, even a small percentage of the over 

71 million users of paid preparers in 2000 can translate into millions of 

affected taxpayers. Furthermore, the consequences for these taxpayers 

may be significant. They may overpay their taxes, overpay their preparers, 

or underpay their taxes and be subject to penalties and interest. 

Surveys of taxpayers, studies of filed returns, and interviews with 

knowledgeable observers all show that some taxpayers are poorly served 

by their paid preparer. We estimate that 5 percent of paid preparer users 

had no confidence that they had not overpaid their taxes, and another 7 

percent had little confidence, as shown in figure 1. These results echo a 

1997 Consumer Reports nonrandom survey of 26,000 of its readers, in 

which 6 percent said they discovered an error made by their preparers. 

Because these surveys are based on taxpayers’ perceptions and ability to 

identify preparer errors, they may underestimate the extent of the 

problem. However, there is no evidence about the size of the 

underestimate. 

Studies of filed returns also suggest that a small percentage of paid 

preparer users are poorly served. For example, we estimate that over 1 

million of about 67 million taxpayers who used a paid preparer in 1998 

may have overpaid their taxes by claiming the standard deduction when 

they would have been better off itemizing. Similarly, a January 2003 report 

by the Treasury Inspector General for Tax Administration estimated that 

there were approximately 230,000 returns filed by paid preparers in tax 

year 2001 where taxpayers appeared eligible for but did not claim the 

Evidence Suggests 

That a Small 

Percentage of 

Taxpayers Are Poorly 

Served Because of 

Problematic Preparer 

Performance 

A Variety of Evidence 

Suggests That a Small 

Percent of Taxpayers Are 

Poorly Served by Their 

Preparer 
Page 7 GAO-03-610T 

additional child tax credit. In addition, a 2002 IRS study of earned income 

tax credit returns for tax year 1999 estimated over- and under claims of 

$11 billion and $710 million, respectively. IRS reported that paid preparers 

filed more than 65 percent of all earned income credit returns. It is not 

clear how many of the over- or underpayments in these examples are the 

fault of the preparer and how many are the fault of the taxpayer. It seems 

likely that preparers bear responsibility for at least some of the over- or 

underpayments. But, taxpayers could be at fault if they provide the 

preparer with incorrect or incomplete information. 

Knowledgeable observers confirmed that some taxpayers are poorly 

served by paid preparers. For example, in the fiscal year 2002 annual 

report, IRS’s National Taxpayer Advocate recommended requiring minimal 

levels of competency for paid preparers in order to better serve taxpayers 

and improve compliance. In another example, an IRS official responsible 

for overseeing the local paid preparer penalty program told us that based 

on the problems that he has seen and the amount of penalties he has 

issued, he believes poor service is more common among unlicensed 

preparers. 

Overall, the evidence from taxpayer surveys, studies of filed returns, and 

knowledgeable observers demonstrates that some taxpayers are poorly 

served by their preparers. The evidence does not allow a precise estimate 

of this problem. The only representative information available—from 

taxpayer surveys---suggests that a small percentage of taxpayers perceive 

problems with their preparers. However, even a small percentage of all 

taxpayers who use preparers equates to millions of people. 

Paid preparers can poorly serve taxpayers through a variety of 

problematic actions and inactions. For example, preparers may fail to 

adequately probe and understand taxpayers’ personal circumstances. We 

estimate that 3 percent of users did not believe that their preparer had 

enough information to accurately complete their return. Such lack of 

probing could explain the examples of taxpayers overpaying or 

underpaying their taxes. 

A more egregious example is ignoring known information about a 

taxpayer’s personal circumstances. In one instance, a paid preparer told 

us of a disabled taxpayer with limited English skills who overpaid his 

taxes by about $3,500 to $5,000. The taxpayer had received notices for 

several years from IRS stating he might be eligible for the earned income 

tax credit. Each year, he took the notices to his preparer but the preparer 

Problematic Preparer 

Actions and Inactions 

Result in Poor Service to 

Taxpayers 
Page 8 GAO-03-610T 

took no action. Eventually he changed preparers and his new preparer is 

working to amend the returns. 

Other lapses are less severe because they are caught and corrected by IRS 

and account for a small percentage of returns completed by paid 

preparers. For example, in tax year 2000, IRS identified 357,000 

computational errors on returns filed by paid preparers. 

Some preparers provide questionable advice, which could contribute to 

taxpayers owing additional taxes, interest, and penalties. For example, one 

paid preparer told us of another preparer who set up certain trusts, 

claiming that the trusts were legitimate tax shelters. IRS later determined 

that the shelters were not legitimate. We do not know whether the 

taxpayer was complicit with this scheme; however, the taxpayer, a 

successful businesswoman, now owes a large amount of tax. In a related 

example, another paid preparer advised a married couple with two 

children that it was appropriate to file two tax returns with each claiming 

the head of household status, claiming one child, and receiving the earned 

income tax credit. The adjustments made to the taxpayers’ accounts in 

subsequent examinations resulted in a bill in excess of $4,000, which the 

taxpayers have no means to pay. 

In extreme cases, some preparers engage in clear-cut fraud. Identified 

instances of fraud are rare—IRS recommended prosecution on 162 cases 

in calendar years 2001 and 2002. However, the consequences for taxpayers 

and the government can be severe. For example, one preparer, who was a 

former police officer, cost the Treasury about $1.1 million. After providing 

clients with copies of their tax returns, this preparer altered the returns, 

adding fraudulent dependents, child credits, and earned income credits. 

The preparer filed all returns electronically, keeping part of the refunds as 

a fee, unbeknownst to some clients. The clients received the remainder of 

their refunds, which were inflated by an average of $1,860. The IRS audited 

almost 700 of this preparer’s returns, with many clients owing additional 

taxes and interest for multiple years. The preparer was ordered to pay 

$342,446 in restitution to the IRS, but this did not help clients pay their 

back taxes. Eventually, this preparer was sentenced to 51 months in 

prison. 

In another example, one paid preparer told his elderly client to provide 

him with the checks to make her quarterly estimated payments. Although 

he claimed these payments on the client’s tax return, he never gave the 

checks to IRS—he kept them for himself. After receiving notices from IRS, 
Page 9 GAO-03-610T 

the taxpayer visited the paid preparer who told her that IRS must have 

made a mistake. The preparer is now in jail. 

Problematic preparer behavior may not always result in taxpayers over- or 

underpaying their taxes, it may also result in taxpayers overpaying for 

services they do not understand. Preparers offer packages of services 

geared toward accelerating the receipt of refunds, a service that can be 

particularly appealing to low income taxpayers who often want or need 

their refunds quickly. These packages typically include electronic filing 

and Refund Anticipation Loans (RAL). RALs are short-term loans arranged 

by preparers, issued by financial institutions, and secured by a taxpayer’s 

refund. After the return is filed electronically, the preparer is notified by 

IRS whether or not the taxpayer has outstanding tax debts or selected 

other debts (e.g., student loans, child support). If the RAL is approved, the 

taxpayer receives the loan and his or her refund is directly deposited into 

the preparer bank account. Taxpayers who buy these services can get a 

loan on their refund in 0 to 2 days, while taxpayers who file electronically 

receive their refund in 10 days. Although some people are willing to pay 

for the faster services, advertisements that promote RALs or large refunds, 

such as those excerpted in figure 3, may leave taxpayers confused about 

the benefits of the services they are purchasing. 
Page 10 GAO-03-610T 

Figure 3: Excerpts of Preparer Advertisements for Large or Accelerated Refunds 

These advertisements were not selected to represent the entire industry. 

However, two tax clinic directors told us that some preparers do not 

always explain the full costs of the services. Specifically, some taxpayers 

are confused about the cost associated with RALs, alternatives to using 

RALs, and the related interest costs. Consequently, taxpayers cannot 

always weigh the cost of the service against the benefits that they might 

receive. 

Based on information we gathered, fees for these packages vary widely. 

For example, while some preparers charge nothing for electronic filing 

services, one preparer we spoke to (while we were posing as a potential 

client) said he would charge us between $210 and $250 to file 

electronically. Another preparer said he would charge $130 for a RAL on a 

$1,200 refund due, which equates to an annual interest rate of about 400 

percent. In another example, one preparer said he would charge $174 for a 

RAL on a $700 refund due, which equates to an annual interest rate of over 

900 percent. These examples are not representative of all preparer fees; 

the exact amounts of preparer fees for accelerated refunds depend on 

Source: Various Paid Preparer Advertisements.

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Page 11 GAO-03-610T 

various individual circumstances, such as the financial institution the 

preparer uses to finance the loan and the amount of refund due. 

Yet, such fees can significantly reduce the refund a taxpayer receives. One 

tax clinic director informed us of a disabled taxpayer who was due a 

refund of $1,230 on a simple return. After paying various fees, such as 

return preparation and a RAL, she received a check from her preparer for 

$414—about 34 percent of her expected refund. Taxpayers are using these 

refund acceleration services in increasing numbers. Based on IRS data, the 

National Consumer Law Center estimates that 12.1 million people received 

a RAL in 2001, up from 10.8 million in 2000. Taxpayers paid $907 million 

for these services in 2001, up from $810 million in 2000. 

Another form of overpayment is purchasing services that may not be 

needed. In an interview with an IRS employee, we learned of a taxpayer 

who, for 2 years, went to a large tax preparer and paid about $200 for 

returns that were not required to be filed. The elderly taxpayer’s sole 

income came from Social Security and a small pension—about $6,000 per 

year—and was below filing thresholds. 

Although IRS is not responsible for ensuring the quality of service paid 

preparers provide, it does have the authority to monitor and take action 

against paid preparer misconduct. Specifically, there are three key offices 

with a responsibility for detecting and taking action against cases of paid 

preparers misconduct: (1) the Office of Professional Responsibility, which 

sanctions attorneys, CPAs, and enrolled agents for ethical or conduct 

violations; (2) Examination, which assesses penalties to any paid preparer 

for violations discovered during an audit; and (3) Criminal Investigation, 

which prosecutes preparers for fraudulent or other criminal activities. IRS 

has taken action against some preparers. For example, according to IRS, 

Examination issued 987 penalties totaling over $4 million in fiscal years 

2000 and 2001. Additional information on programs administered by these 

offices will be included in our follow-up report, which is planned for 

issuance this summer. 

Without paid preparers’ expertise, many taxpayers would be unable to 

submit accurate tax returns. However, taxpayers who use a paid tax 

preparer are still responsible for the accuracy of their return. According to 

the law, taxpayers take responsibility for the accuracy of their returns 

when they sign them. Even if the preparer is at fault, it is the taxpayer who 

is ultimately responsible for any additional tax, interest, and/or penalties. 

Taxpayers Can Take 

Steps to Help Ensure 

They Benefit from 

Using a Paid Preparer 
Page 12 GAO-03-610T 

Paid preparers are not always the cause of the problems discussed in this 

statement. Taxpayers can contribute to these problems in several ways. 

Paid preparers told us that they rely heavily on their clients’ oral 

statements and documentation to complete tax returns. Paid preparers 

take various steps to ensure that the tax returns they complete are 

accurate, such as probing about personal circumstances and reviewing 

income and expense documentation. However, the effectiveness of such 

steps depends, in part, on the taxpayer. If taxpayers provide inaccurate or 

incomplete information about, for example, their social security or if they 

do not keep tax documents, such as wage or interest statements, preparers 

cannot complete an accurate return. Also, some taxpayers wait until the 

last minute to have their taxes prepared, which may limit the preparers’ 

opportunity to probe. 

IRS and other organizations, such as the American Bar Association and the 

Better Business Bureau, have produced guidance for taxpayers for 

selecting and working with paid preparers. Some of the most common 

advice from these organizations is shown in figure 4. 
Page 13 GAO-03-610T 

Figure 4: Precautions to Take When Using a Paid Tax Preparer 

• When searching for a preparer, get recommendations from friends, co-workers, or 

other trusted people. Find out if you qualify for free services. 

• Interview the preparer before hiring to check out qualifications, experience, discipline 

problems, and any history of complaints. 

• Be sure you understand other services you will be getting, such as electronic filing or 

Refund Anticipation Loans. Find out whether these services are optional, what they 

will cost, and how they will benefit you. 

• Don’t hire a preparer who guarantees a refund before seeing your tax documents or 

whose fee is a percentage of your refund. 

• Make sure your preparer understands your personal circumstances, income, and 

expenses. Show your official tax documents to your preparer, including W-2’s and 

1099s. 

• Review your completed return before you sign it. Check that your tax information is 

correct. Even though someone else completed it, you are responsible for the accuracy 

of every item on your return. 

• Don’t sign a blank return and don’t sign in pencil. 

• Make sure your preparer’s signature and tax identification number are on the return 

before you submit it. Keep a copy of the final return. 

• Don’t make checks for taxes due payable to preparers. Checks should be made 

payable to the United States Treasury. 

Source: Internal Revenue Service, Tax Topic 254 - How to Choose a Paid Tax Preparer (Washington, D.C.); American Bar Association 

Section of Taxation, Tips for Filing Your Return with a Tax Preparer (Washington, D.C.); Better Business Bureau, Tax Preparers, 

(Arlington, VA); and Internal Revenue Service, 1040 Instructions (Washington, D.C., 2002). 

These precautions can help taxpayers avoid some of the problems we 

identified, such as overpaying their taxes or other more serious 

consequences, such as delinquent taxes, interest, and penalties owed to 

the Treasury. 

Mr. Chairman, this completes my prepared statement. At this time, I 

would be happy to address any questions the Committee may have. 

Jim White, (202) 512-5594 

Jonda Van Pelt, (415) 904-2186 GAO Contacts 
Page 14 GAO-03-610T 

In addition to those named above, Vincent Balloon, Larry 

Dandridge, Katherine Davis, Michele Fejfar, Tre Forlano, 

Evan Gilman, Brittni Milam, Libby Mixon, Cheryl Peterson, 

Peter Rumble, and Kathleen Seymour contributed to this 

report. 

Acknowledgments 

(440171)