Tax Preparation Fees, the EITC, and the Case for Certification

The Progressive Policy Institute’s (PPI) new report highlights the ways in which tax preparer fees diminish the value of the EITC for low-income working families. The report, a follow-up to a 2002 Brookings Institution/PPI report on the same topic, finds that the pattern of exploitation of EITC recipients documented in the earlier study is ongoing 14 years later. Workers eligible for the EITC continue to spend large sums (an average of $400) at tax preparation chains and these chains are targeting low-income communities as they cluster in high EITC-zip codes. The report also cites GAO studies showing high error rates by paid tax preparers. Suggested remedies include tax simplification and outreach on VITA as well as requiring competency tests for tax preparers.  The Center for American Progress lays out the case for regulating tax preparers in this post: 3 Reasons Why We Should Certify All Paid Tax Preparers.