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Money Magazine's Annual Tax Test
Money Magazine annually submits a hypothetical family's records to 30-50 different tax preparers. All of the records are identical, but the results aren't!
Listed below are the results from the Annual Tax Test of taxes prepared for eight different years. Incredibly, the results show an average discrepancy of over 300% in what the tax preparers determined was due to the IRS by the taxpayer.
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Range of Annual Tax Test Preparers Statement of Tax Owed
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% of Difference
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1987
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$7,202
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to
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$11,881
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65%
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1988
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$12,529
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to
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$35,813
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250%
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1989
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$9,806
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to
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$21,216
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116%
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1990
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$6,807
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to
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$73,247
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1076%
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1991
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$16,219
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to
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$46,564
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286%
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1992
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$31,846
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to
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$74,450
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233%
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1996
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$36,322
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to
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$94,438
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260%
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1998
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$37,715
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to
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$68,912
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182%
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Conclusions from Money Magazine's Tax Tests:
- Fees, it turns out, are no clue to accuracy.
There was no correlation between the size of preparers' fees and how well they scored.
(Money Magazine March1988, March1989, March1997)
- Congress can cut taxes all it wants, but if your tax preparer doesn't know all the rules - and MONEY's tax test shows that most don't - you might actually end up paying more.
(Money Magazine, March 1998)
- The unavoidable conclusion: Many preparers aren't keeping up with the tax law, or they lack adequate review processes in their practices. (Money Magazine, March 1992)
- The CPA who designed 1989's test with a colleague, felt that so many did poorly because taxes are just one part of their practice and tax law has become too complex to keep up with on a part-time basis. (Money Magazine, March 1990)
- The "right" amount of tax depends as much on a tax pro's judgement call as on the tax law itself. The pros had varying interpretations of murky areas of tax law.
(Money Magazine, March 1997)
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