Penalized tax preparers rarely pay

WASHINGTON - The IRS has ordered $2.4-million in penalties against tax preparers in the past two years but has collected $291,000, raising questions about toleration of poor performance, congressional auditors say.

Less than half the penalized preparers paid a fine, according to investigators from the General Accounting Office.

Tax officials told the auditors "they cannot afford to make these low-dollar paid-preparer cases a priority given their responsibility for addressing billions of dollars in uncollected taxes."

However, leaders of the tax-writing Senate Finance Committee said the GAO findings to be released this week demonstrate the Internal Revenue Service needs to reorder its priorities now that more than half the people filing tax returns use paid preparers.

"Clearly people benefit from paid preparers, but there are some bad apples in the bunch. The IRS and Congress need to do more to make sure the bad apples are tossed out of the basket," said the panel's chairman, Sen. Charles Grassley, R-Iowa.

In 2001, more than 72-million taxpayers used paid preparers. If even a small percentage of them get bad advice, millions might be ill-served, the congressional auditors said.

Collecting so little of the fines levied by the government sends "a mixed message about whether poor performance by preparers will be tolerated," their report said.

In January, the IRS reorganized what is now its Office of Professional Responsibility, doubled its staff and started work on a "national return preparer strategy." But agency officials told the auditors the office has limited resources.

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