Policy

A Classic Tax Time Gotcha: With a Bonus Regulatory Twist

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It's always fun to ask public officials with the power to simplify our tax code whether they do their own taxes. The Daily Caller indulges in the age old pastime with predictable results:

IRS Commissioner Doug Shulman practically ran away when The Daily Caller asked him whether he prepares his own taxes….

"I don't have time for this  … If you want an interview, you can call my office," he said, speed-walking down an ornate hallway in the Longworth House Office Building….

Shulman's spokesman later said he employs an accountant to prepare his tax filings, as does about 60 percent of the country who shell out hundreds or even thousands of dollars each for such services.

Meanwhile, legislation is are under consideration to regulate the wazoo out of tax preparers:

Rep. Xavier Becerra, a top Democrat on the Ways & Means Committee that was holding the hearing, is keeping a watchful eye on those tax preparer services, who he says sometimes fleece unwitting customers. "Americans who could fill out a simple [tax forms] are being charged hundreds of dollars to do what they" could on their own, he said.

So does Becerra prepare his own taxes?

"No. I have a tax preparer back home who's been doing it for me for many years," he told The Daily Caller. Becerra explains that his finances are more complex — and his tax filings fall under far greater scrutiny — than ordinary Americans who could figure out the forms if they tried.

How about the chairman of Ways & Means oversight subcommittee that asked for Shulman to testify Thursday?

"Oh no, no, no, no, no. I have an accountant that I've been using for years," Rep. John Lewis said. He said he needs to head home this weekend to fill out paperwork for his accountant.

What should us ordinary folk do?

Lewis's suggestions is for people who are having a hard time with the forms go to the IRS for help. "Get on the telephone, call an IRS service center or go visit a service center … and have them walk through their filing," which, he noted, the IRS does for free.

Good advice. Except that, according to a report from the Treasury Inspector General for Tax Administration, you get what you pay for:

The IRS provided "flatly incorrect answers 20 percent of the time." In another 15 percent of the cases, the IRS provided a "correct" answer without first obtaining the background information necessary to provide a correct answer–a serious oversight when providing tax advice.

As the IRS hotline competitors (soon to be regulated!) note:

  • IRS Answer Line receives approximately 118 million calls every year. Out of that number, nearly 41% of those calls are unanswered.*  This can lead to 48,000,000 unanswered questions.
  • IRS Answer Line has an estimated 10% error rate in information provided. That's over 7,000,000 incorrect answers!