Jeanette Burgos has spent weeks trying to understand why it cost her $712 to get her taxes done at the Liberty Tax Franchise in New Britain.
Her taxes aren’t complicated, according to a tax expert NBC Connecticut Responds consulted. With her income status, she even qualifies to have a preparer file her taxes for free at a community center.
Burgos didn’t know this when she walked through the door at Liberty Tax in February. She agreed to the $712 in charges before she left the store and went home. Feeling uncomfortable, she returned to Liberty Tax three hours later to see if she could still cancel the transaction, but was told it was too late.
The owner of the New Britain Liberty Tax franchise told NBC Connecticut that his charges reflect corporate guidance and that he tells every customer what they’ll pay before they sign on the dotted line.
A spokesperson for Liberty Tax’s corporate office in Virginia told NBC Connecticut they, “have not found an indication of problematic pricing,” on Burgos’ filing.
Our consumer team wanted to know how the $712 Burgos was charged stacks up against competitors. The company-owned H&R Block in West Hartford said they would charge around $360 to file Burgos’ tax return. A company-owned Jackson Hewitt branch, also in West Hartford, said it would cost her $300 to $350.
All three of these companies base their pricing on the number of forms associated with a tax filing. Some tax preparers, like Torrington-based Kris Roberts, charge by time. Roberts, the Connecticut chapter president of the National Association of Tax Preparers, estimates Burgos would have paid between $100 and $150 for her service.
Roberts said she’s not surprised by Burgos’ complaint and said, “a scary thing that it doesn’t surprise me, because I run into it all the time.”
She asserted that the lack of consistency in pricing between various tax preparers is a three-part issue. The first, she said, is systemic in that, “Congress has made the tax code so complicated, that people can’t do what we consider simple returns anymore.”
Consumer education is another problem. Roberts said many customers don’t ask enough detailed questions about pricing.
Finally, there’s a lack of oversight for the industry. According to Commissioner Kevin Sullivan of the Connecticut Department of Revenue Services, “right now there’s absolutely no regulation, no oversight, no standards for what we would call commercial tax preparers in the state of Connecticut.”
Sullivan hopes a bill proposed this session will help set an industry-wide standard by protecting, “the right of the taxpayer to know at the beginning of that conversation, how long is this going to take, do I have an opportunity to reconsider, how much are you going to charge me, what exactly are you going to charge me for.”
All three major companies will answer most of those questions up front and customers do have the option to reconsider their options. Neither Jackson Hewitt nor H&R Block disclosed what they charge for various forms, though a spokesperson for H&R Block told us their average charge is less than $220 and that all clients may request a fee estimate before deciding if they want to file. A spokesperson for Jackson Hewitt said their prices start at $48 and that their fees are based on the complexity of the return.
After asking the owner of the Liberty Tax in New Britain, he did give NBC Connecticut a breakdown of charges for Burgos’ nine documents. Almost half of the $712 she was charged came from two sheets alone: her 1040A and her Earned Income Credit. Both of these forms are specifically designed for low-to-moderate income earners.
Roberts said, “because she qualifies for these earned income credits, it’s almost like she’s being penalized.”
In the end, the Liberty Tax franchise owner offered to reduce Burgos’ charge to what she paid last year through TurboTax – just over $140.
Residents can get more information on free assistance in completing Connecticut State tax returns by calling (860) 297-5962 or by clicking here.
Low-to-moderate income earners (under $50,000) may be able to access free state and federal tax help through the Volunteer Income Tax Assistance (VITA) Program. Enter a zip code here to find a location.
The Connecticut Department of Revenue Services also offers the following important tax filing tips:
• Select a tax preparer you can trust. Taxpayers entrust vital personal data with the person preparing their tax return, including income, investments and Social Security numbers. Ask questions about cost up front, and explore your options before making a decision.
• Review the tax return and ask questions before signing. Taxpayers are legally responsible for what’s on their tax return, regardless of whether someone else prepared it.
• Make sure the preparer signs the return and includes their Preparer Tax Identification Number (PTIN). The vast majority of paid preparers are required to have a valid PTIN.
• Never sign a blank tax return. It’s a red flag when a taxpayer is asked to sign a blank tax return. The preparer can put anything they want on the return — even their own bank account number for the tax refund.
• Make sure that you make copies of your documents before giving them to a tax preparer. After your taxes are filed, keep your documents neatly organized and retain them for at least three years.