Tax Time Trouble

Tax Time Trouble

Over 480,000 New Mexicans file their taxes and turn to a paid tax preparation firm for help.  Unfortunately, according to a recent mystery shopper report performed by First Nation’s Development Institute many tax preparation firms are providing low quality services and taking advantage of vulnerable low-income filers by imposing unnecessary fees or steering them towards an unnecessary Refund Anticipation Check product.

Between February 1st and April 18th 2011, First Nations Development Institute conducted 12 “mystery shopper” tests of paid tax preparers in New Mexico.  These mystery shopper tests were conducted in Gallup, Grants, Bernalillo, Farmington, and Albuquerque, New Mexico, all communities with high Native American populations and close to Indian reservations.

Shawn Spruce of First Nations Development Institute spoke of his mystery shopper findings at Prosperity Work’s 2011 New Mexico Assets Consortium Partner Training.  His report finds outrageous fees, poor disclosure, minimal privacy safeguards, and costly errors appeared to be the norm in this largely unregulated industry.  In one encounter he found a tax preparer indicating she used her own bank account for taxpayer’s e-file and direct deposit.  Click Tax Time Troubles to download the full report.