I’m a fan of the VITA program, in which the IRS trains volunteers like me to help low-income people fill out their tax forms.
The reason why I’m enthusiastic about working arm-in-arm with the tax collector is that most of these low-income filers are filing for refunds, and that if they fail to file — or fail to get help applying for the deductions and credits to which they are legally entitled — they leave their money in the government’s hands. And the way I see it, that’s a dangerous place to leave your money.
Anyway, one of the drawbacks of relying on an army of quickly-trained volunteers to help people navigate the notoriously labyrinthine tax code is that they will frequently screw up.
The Treasury Inspector General for Tax Administration developed two model taxpayers with certain typical characteristics and used these taxpayers to test a set of VITA volunteers. Only 39% of the resulting tax returns were prepared accurately.
This isn’t a good thing, even though the errors were usually beneficial to the taxpayer:
In the sampling of hypothetical returns, taxpayers would have gotten a total of $31,828 more than they should have.
In the few cases when taxpayers were deprived of benefits they should have gotten, those taxpayers would have paid $4,411 more in taxes than necessary.
The taxpayer is the one who will be held responsible for the errors, not the volunteer tax preparer (who is typically anonymous anyway). It is unlikely that the IRS would bring down the hammer on someone for having had the bad luck of having been assigned to a bumbling volunteer, but they will correct the forms and lower the refund if they catch errors.
Any low-income filer who anticipated a big refund only to have that refund chopped down by an IRS computer will be very disappointed, or worse if they’ve already made purchases in expectation of the refund.
But I hope this news encourages more people to become volunteer tax preparers — if you’re worried you’ll make mistakes, well, consider that par-for-the-course. And remember that even the IRS’s own employees make a lot of screw-ups. A couple of years ago, auditors gave a similar test to IRS tax preparers and found that 19 of the 23 returns they examined were wrong, and another set of testers who called the IRS help line to ask tax questions got correct answers only 62% of the time.