PROFESSIONAL COMMENTARY | TAX PRACTICE
By Jessica Marschall | March 2026
A recent report from the Center for Taxpayer Rights sent undercover investigators into tax preparation offices across six states, and what they found was alarming. Non-credentialed paid preparers routinely failed to ask basic questions about household composition and income. When they did ask, their understanding or application of the tax law was often simply wrong. The investigators found pervasive incompetence, significant errors, and in some cases, outright fraud.
For those of us who have spent careers building credentialed, accountable tax practices, this report confirms something we have witnessed firsthand: the quality gap between credentialed and non-credentialed preparers is not a technicality, it has real consequences for real people, in the form of significant fees, penalties, and interest.
The Scope of the Problem
The numbers are striking. According to the Government Accountability Office, over half of all individual taxpayers used a paid preparer in fiscal year 2024. Yet approximately 56% of the more than 684,000 tax preparers registered with the IRS are not CPAs, attorneys, enrolled agents, actuaries, or even participants in the IRS’s voluntary Annual Filing Season Program. They are, in the eyes of the law, essentially unregulated.
The GAO has noted that unqualified preparers make serious errors at a higher rate than both self-preparers and credentialed professionals. Those errors cut both ways: clients either overpay and forfeit benefits they are entitled to, or they underreport liabilities and face audits and penalties down the road. The IRS’s own data suggests non-credentialed preparers are disproportionately responsible for improper Earned Income Tax Credit claims – in fiscal year 2024, 27.3% of EITC payments, totaling an estimated $15.9 billion, were determined to be improper.
And then there are the “ghost preparers” , who are individuals charging fees to prepare returns but refuse to sign them or provide a valid Preparer Tax Identification Number, leaving the taxpayer legally responsible for whatever was filed. The IRS included ghost preparers on its 2026 “Dirty Dozen” list of top tax scams, a signal of how pervasive the problem has become.
Big Brands Are Not Immune
It would be tempting to assume these problems are limited to storefront operations or informal preparers. They are not. In 2024, the Federal Trade Commission took action against H&R Block, alleging that the company deceptively marketed its products as “free” when many consumers were not eligible for the free-file options, and that it placed significant obstacles in front of customers who tried to downgrade to more affordable products, which included wiping their tax data when they attempted to do so.
Unfortunately, when the business model prioritizes volume and upsell over accuracy and client service, consumers bear the cost. The FTC’s action is a reminder that brand name recognition is not a substitute for genuine professional accountability.
What We See in Practice
Our practice, like many mature firms in the profession, have been quite full for years. We work primarily on a referral basis and focus on more complex returns: business owners, multi-state filers, clients navigating significant life transitions, and those with layered income situations that require genuine expertise rather than software-guided data entry. But we recognize that sometimes simple W2 filers simply do not want to handle their own taxes and we are working with other CPAs, accountants, and Enrolled Agents and can provide referrals. Often their prices are less than the local kiosk at the box store.
What we see, season after season, aligns with what the mystery shoppers documented. New clients come to us having been overcharged for the wrong product, having missed credits they were entitled to, or having signed returns they did not understand. Some arrive after receiving IRS notices tied to errors made by a prior preparer. A few have discovered, only after the fact, that their refunds were diverted. We see the failure to report the sale of a personal home all the time. The IRS automatically sends a tax bill for the GROSS amount reported on the 1099S. We receive at least a call a month about someone having a $25,000 to $85,000 tax bill sent with a threat to seize assets if not paid. This takes a simple amended return with inclusion of the personal home sale exclusion calculated.
A Regulatory Gap That Congress Is Finally Addressing
The IRS attempted to establish minimum competency standards for tax preparers during the Obama administration, only to have the program invalidated by federal courts in 2013 on the grounds that the IRS lacked the statutory authority. Since then, the agency has offered only a voluntary education program.
Earlier this year, the Senate Finance Committee introduced the bipartisan Taxpayer Assistance and Service Act. Among its provisions: penalties for improperly altered returns, requirements for valid PTINs, and – critically – authority for the IRS to deny, revoke, or suspend PTINs for violations. The National Association of Tax Professionals voiced strong support, with a key condition: any oversight framework must include a continuing education requirement.
As the NATP’s director of tax content and government relations put it: if you’re getting a haircut or a manicure, the person serving you needs a license. But until Congress acts, someone can buy tax software and start charging for returns with no minimum knowledge requirement whatsoever. This theoretical risk has been proven through the mystery shopper study.
What This Means for Taxpayers
If you are choosing a tax preparer, credentials matter. Look for CPAs, enrolled agents, or attorneys – professionals who are subject to continuing education requirements, ethical standards, and meaningful oversight. Ask to see a PTIN. Verify that your preparer will sign your return. Be cautious of anyone promising an unusually large refund before they have reviewed your documents.
For those with straightforward returns, a credentialed and properly trained preparer does not need to be expensive. For those with complexity – business income, investments, multi-state situations, or significant deductions – the cost of working with someone unqualified will almost certainly exceed whatever you saved on fees.
The Center for Taxpayer Rights mystery shopping report is important not because it reveals something new to credentialed practitioners, but because it puts hard data behind what we have long observed. Tax preparation is not a commodity. Done well, it protects your money, your compliance, and your peace of mind. Done poorly – or fraudulently – the consequences fall entirely on you.
- Center for Taxpayer Rights — “Mystery Shopping Visits” report (covered by Accounting Today, March 16, 2026): undercover investigators finding widespread errors and fraud among non-credentialed preparers across six states
- Government Accountability Office — GAO report calling for stricter IRS oversight of tax preparers (Accounting Today, February 24, 2026)
- Federal Trade Commission — FTC action against H&R Block for deceptively marketing “free” filing and wiping consumer data upon downgrade attempts (February 2024)
- Washington Post — Coverage of tax season preparer fraud and errors (March 21, 2026) — note: this article was paywalled and could not be fully accessed, so it is referenced in spirit but not directly quoted
- Insightful Accountant — “Bipartisan Bill Targets Unregulated Tax Preparers” (March 5, 2026), covering the Senate Finance Committee’s Taxpayer Assistance and Service Act
- IRS / National Taxpayer Advocate — 2025 Annual Report to Congress, including data on improper EITC payments and non-credentialed preparer error rates
- IRS 2026 “Dirty Dozen” — Annual list of top tax scams, including ghost preparers
Jessica Marschall is a credentialed tax professional with a practice focused on complex individual and business returns. She works with a vetted network of accountants to ensure clients who cannot be served directly are connected with qualified, trustworthy professionals.
