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Abstract:
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There are no federal restrictions on who can work as a paid tax return preparer. As of early 2008, only two states regulated who could legally prepare tax returns for pay, with requirements ranging from basic education, bonding and registration to a stricter system that also mandates testing. In response to congressional interest into the likely cost-effectiveness of a federal regulatory system for paid preparers, GAO conducted statistical analyses, including modeling to determine the likelihood that a return would be accurate and to estimate dollar savings that result from increased accuracy. This paper discusses GAO's research on the efficacy of paid tax preparer regulation, including model specification, supplemental research, and how (if) the collective evidence addressed policymakers' questions as to the feasibility and likely effectiveness of federal paid tax preparer regulation.
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