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Fee disclosure would make tax preparation industry more transparent

Posted June 27, 2013 in Press Releases

New report recommends model disclosure box

Disclosure of fees charged by the tax preparation industry would be a good step toward making sure that Americans receive quality tax services, according to a new report by Policy Matters Ohio.

The report, “Improving tax preparation with a model fee disclosure box,” finds that tax preparation by commercial paid preparers, despite being important to households, suffers from a lack of transparency. Clients struggle to compare prices and services, and have a hard time finding information about preparer credentials.

“Broader regulation is needed, but a fee disclosure box will give customers the ability to compare and contrast services, and better understand the charges they will have to pay,” said David Rothstein, report author and project director for Policy Matters. “Right now, paid tax preparation is unnecessarily opaque and largely unregulated.”

Although the Internal Revenue Service recently announced a program for registering the estimated one million paid tax preparers operating nationwide, the changes are tied up in court and don’t include a fee disclosure box.

Three states regulate preparers but don’t require a disclosure box, although the city of Chicago’s new ordinance does. This report recommends that states and localities require disclosure, and that the IRS license tax preparers and require that they receive continuing education.

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Policy Matters Ohio is a nonprofit, nonpartisan state policy research institute with offices in Cleveland and Columbus.