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WHEN NOT TO PAY EXTRA

September 17, 2007

While it's against my interest to say discourage higher tax prep fees, sometimes higher fees really aren't worth it. Russ Fox reports on a preparer who would offer clients increased refunds for increased fees:

Thomas Mercer of Romulus, Michigan pleaded guilty to 30 counts in federal court. Mr. Mercer prepared 23 tax returns full of bogus deductions for things like business losses, charitable donations, and tuition and fees. His clients agreed to share their refunds—refunds that ranged between $900 and $19,000 for a total of $330,000—with him. Mr. Mercer also coached his clients on what to say during meetings with the IRS and provided them with phony documents backing up the phony deductions. Mr. Mercer is looking at a significant stay at ClubFed.

Not only will Mr. Mercer be going away, his clients can expect some awkward conversations with the IRS.

Clearly, higher prices don't always mean higher quality. Still, I'd be happy to explain the virtues of paying your tax preparer 2% of your adjusted gross income, to make all of your miscellaneous itemized deductions actually deductible...

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