Cross References
• Treasury Inspector General For Tax Administration, Number 2012-40-088, July 27, 2012

A report entitled, “Ensuring the Quality Review Process Is Consistently Followed Remains a Problem for the Volunteer Program,” released by the Treasury Inspector General For Tax Administration, reveals that volunteers scored a 49% accuracy rate this past filing season when tested by auditors posing as taxpayers.

The volunteer program provides no-cost federal tax return preparation and electronic filing to underserved segments of individual taxpayers, including low- to moderate-income, elderly, disabled, and limited-English-proficient taxpayers. However, preparing accurate tax returns remains a challenge for the volunteer program. When taxpayers are denied credits or deductions to which they are entitled, they may never realize they are in fact entitled to these funds, and those who know they are entitled will have the added burden of filing an amended tax return to obtain the funds.

The accuracy rates of tax returns prepared for auditors at IRS volunteer program sites increased from 39% in the 2011 filing season to 49% in the 2012 filing season. Three of 16 tax topics tested contributed the most errors—the deductions for educator expenses, individual retirement arrangement contributions, and small business expenses. The accuracy rates for three other topics ranged from 77 to 83%, and the accuracy rates for the remaining 10 tax topics were greater than 90%.

Tax returns were prepared incorrectly because volunteers did not follow all guidelines. For example, volunteers did not always use the intake sheets correctly.

The deductions and credits to which the auditors were entitled were denied on three tax returns because the auditors did not provide receipts to support the expenditures. These were not counted as errors when calculating the accuracy rates.

The IRS has implemented an extensive quality review process, but it has limitations and may not be providing reliable results. The accuracy rate for the IRS’ statistical sample of prepared tax returns is 92%. This year, the IRS also conducted 53 anonymous shopping visits. Volunteers prepared tax returns for IRS shoppers with a 60% accuracy rate.

The report recommended that the IRS continue to emphasize with volunteers the necessity of reviewing the intake sheet with taxpayers during tax return preparation to ensure tax returns are prepared accurately. The IRS should also establish minimum due diligence standards for volunteers when preparing tax returns.

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