"What we find is there is a booming business in tax preparer fraud," IRS special agent Luis Garcia told The Investigator Tom Meyer.
The IRS will require that tax preparers undergo annual training, in addition to passing a test. Lawyers, certified public accountants and enrolled agents will not be affected by the regulations, which will include penalties for unethical conduct.
Channel 3 News decided to put a few tax preparers to the test before the increased oversight kicks in next year.
A news producer took the identical tax return to 3 different tax preparers and did his own taxes, using the Turbotax software program.
H and R Block offered the largest federal refund: $6,611.
Enrolled agent James Cunningham, of Eastlake, figured a refund of $6,311.
Turbotax calculated the federal refund at $6,096 and Liberty Tax showed a refund of $5,998.
The IRS cited competency, knowledge of the tax code, and the willingness to take a risk as the reasons for the differences.
"Some people might be open-minded on what qualifies as a tax deduction, whereas there might be a conservative tax preparer who says, 'let's not risk an audit and claim that,'" said agent Garcia.
An agent for Liberty Tax tried to cut a side deal with the undercover Channel 3 News producer, telling him that she would charge $150 for doing the return, "but you can't say nothing to nobody."
Liberty's estimates were all over the map.
First, the company wanted to charge $450, then $539, and finally $300.
Cunningham was the least expensive at $200.
H and R Block charged $379 and Turbotax cost us about $65 at a local store.
The IRS says if you want to do your taxes yourself, their website offers Turbotax and other software programs at no charge.
The IRS said any preparer offering to give you a better deal than the company should send out a big red flag.
A spokesman for Liberty said it's against company policy for preparers to cut their own deals, and they could be fired if they do.