Federal Policy Brief: The Urgent Need for Basic Competency Standards for Paid Tax Preparers

Tax time is a financial springboard for millions of Americans. Research and the experience of tax preparers has shown that tax time is one of the most critical moments in the financial lives of low- and moderate-income households. Thanks to refundable tax credits, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), a substantial composite of low- and moderate-income households receive a tax refund every year.For these American workers, their tax refund check can account for 30% or more of their entire annual income.

Filing and processing returns accurately is a challenge for filers—and for the government. Fifty-six percent of tax filers earning less than $30,000 annually seek professional tax preparation assistance. Without an accurate return, tax filers do not receive the full benefit of tax credits to which they’re entitled under law, undermining the significant boost to financial security that tax time provides. For the government, inaccurate returns waste time, resources and taxpayer dollars.
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