By Herb Weisbaum ConsumerMan
msnbc.com contributor
updated 2/27/2008 9:06:59 PM ET 2008-02-28T02:06:59

A new report from the Council of Better Business Bureaus shows a large percentage of customers are unhappy with the tax preparer they hired last filing season.

“Some of them are still dealing with the mess their tax preparer made as they head into the 2008 tax season,” says the bureau’s Alison Preszler.

The BBB says nearly one-third of the complaints allege the preparer made a mistake, that in many cases resulted in fines or added fees.

About 20 percent of the complaints deal with preparers who were unresponsive. They ignored repeated calls or e-mails from the customer to get assistance, a question answered, or copies of their tax information.

“When people don’t hear back from their tax preparer as soon as they want, they get anxious and nervous,” Preszler says. “They want to know that their taxes are being taken care of, and in a timely manner.”

Robert and Debra Jefferies of Gaffney, S.C., told the BBB their preparation firm dropped the ball when the state audited their back income tax returns.

The state needed information from the tax preparer, but the company never responded. Mrs. Jefferies said she was told repeatedly, “we’re taking care of it.” But it wasn’t taken care of – and for more than a year now the state has garnished her husband’s paycheck. “To this day, they’ve never done anything,” Mrs. Jefferies says. “We weren’t treated fairly.”

Billing disputes are another big problem area. They account for 19 percent of the total complaints filed with the BBB about tax preparers. Most of these billing complaints are from people who say they didn’t know it was going to be so expensive. So it’s very important to find out up front how the service bills.

Here’s a real shocker: About 6 percent of the people who complained to the Better Business Bureau say the tax preparer never filed their return.

Remember: it’s still your return
You may have someone prepare it, but in the end you are ultimately responsible for what’s on your tax return. “You are signing the return under penalty of perjury, so you have an interest in it being correct,” notes IRS spokesman Eric Smith.

Anyone can make an honest mistake, but there are dishonest preparers who deliberately break the rules to deliver a bigger refund than legally allowed. They overstate deductions or make up bogus write-offs in order to inflate your refund.

In January, the U.S. Department of Justice sued a Dallas-area company it accused of claiming bogus fuel tax credits on the returns it prepared. The complaint cites a tax return for one customer that claimed he bought 53,454 gallons of gasoline for work-related purposes. For this deduction to be accurate, the lawsuit says, the taxpayer would have spent more than five times his total income on gasoline.

About 350 tax preparers have been sentenced to prison during the past three years. Many more have been barred from preparing returns or promoting fraudulent tax schemes.

Two weeks ago, the government filed suit to stop a St. Louis CPA and his son from preparing federal tax returns for others. Prosecutors claim the two men were responsible for thousands of fraudulent tax returns that may have cost the U.S. Treasury as much as $29.5 million since 2004.

In its news release about the case, the Justice Department says co-workers referred to one of the men as “the magician” because “numbers on tax returns co-workers prepare are ‘magically’ different after he reviews them.”

“If these preparers play fast and loose with your figures and come up with phony numbers, you are still responsible for the tax due,” says Kenneth Hines, Special Agent in Charge at the Seattle IRS field office. That means you could be hit with penalties and interest.

Right way to choose a tax preparer
You need to be careful when trusting your financial well-being to someone else – as careful as you’d be in selecting other professionals, such as a doctor or lawyer.

Avoid any company that promises bigger returns than the competition, asks you to sign a blank return, or bases its fee on the size of your return.

“That’s an incentive for them to cheat,” warns IRS Special Agent Hines. “And who is left holding the bag at the end of the day? It’s the taxpayer who is lured into this.”

Take the time to find a preparer who is honest, qualified to do the job, and who provides quality customer service. Here’s how to start:

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