Amazing Disrespect for the Tax System and Fellow Taxpayers

A story this week in the Miami Herald tells an appalling story of two tax preparers who claimed bogus first-time homebuyer credits on client tax returns (Nirvi Shah, "Two Miami-Dade tax preparers accused of home buyer credit fraud," 2/23/10). An IRS review of 30 returns prepared by each, indicated that only 1 person qualified for the credit. There are many more returns that these preparers completed for clients that apparently the IRS has not yet examined. The Department of Justice is seeking an injunction to get them to stop preparing returns.

These types of stories are why the IRS is working on new rules to regulate all paid return preparers and why Congress tightened the first-time homebuyer credit when it renewed it last November. Now, taxpayers must attach the signed closing paperwork for the new home.

How do fraudulent preparers stay in business? Clearly, taxpayers do not know enough about the law to know that they are responsible for what is on their return. Apparently, some clients were told the credit was to help keep people out of foreclosure. That supports the dire need to regulate preparers. But, I'm afraid, such fraudsters will stay in business, tell lies to uninformed clients, and perhaps just not sign the returns.

What more can be done? A simpler tax system with fewer deductions, credits and exclusions would help. More people might then prepare their return or be willing to have the IRS prepare it for them as Senators Wyden and Gregg recently suggested in their new tax reform proposal. Also, consideration should always be given to ideas for new tax breaks as to whether they can be handled outside of the tax law. For example, there is no need for higher education tax credits because the government can just fold that expenditure into its Pell Grant and similar programs that already exist to serve families in need of assistance for higher education expenses.

Greater efforts are needed to educate taxpayers too. There should be a mandatory course in high school as well as questions on the high school exit exam, on the basics of one's tax paying obligations as well as other responsibilities and rights they have as citizens. The IRS should have tax reminder ads on popular websites and magazines.

What do you think?

Obama's Proposed Tax Changes for Businesses

The Administration's FY 2011 budget proposal includes numerous tax increases for businesses, and a few decreases, such as a permanent research tax credit. The large mix of increases is quite varied and doesn't really seem to tie to some overall strategy. Also, despite a few years of discussion on lowering the corporate tax rate, there is no mention of it in the tax proposals.

I have a short article summarizing the key business provisions. It also notes that while the significant revenue generation in the budget that comes from high income individuals (about 87% of the increases), a good portion of that will actually come from businesses - sole proprietorships, S corporations and partnership.

Here - Proposed Tax Changes for Businesses in the AICPA Corporate Taxation Insider, 2/25/10.

California Senate Hearing on Tax Expenditure Accountability

On February 24, 2010, the Senate Revenue & Taxation Committee is holding an informational hearing on Tax Expenditure Accountability. Unfortunately, there are no details on the committee's website.

Perhaps they are going to discuss the tax expenditures report? Here is the link to the Dept. of Finance page where they can be found - here.

I'd like to hope that in searching for spending cuts, the committee is going beyond those in budgets and looking at the hundreds of spending items buried in the tax law. I've got some short write-ups on this and some examples of spending that can legitimately be cut - here. And here.

Anyone know what the focus and purpose of the hearing is?

Wyden-Gregg Bipartisan Tax Fairness and Simplification Act

As promised, on February 23, Senators Wyden (D-OR) and Gregg (R-NH) introduced their tax reform proposal called the Bipartisan Tax Fairness and Simplification Act of 2010. They have a webpage with the full text of the 186-page legislative proposal, summaries and even a sample 1-page tax form for individuals.

I look forward to reading the 186 pages in detail as there are several intricacies involving retirement savings accounts and lifetime savings accounts (sounds a bit like what President Bush's Advisory Panel on Tax Reform proposed in 2005) and a few other areas to delve into to see what they truly offer in terms of simplification and if they are equitable.

Some general observations:

1. Consumption tax or income tax? It seems to be a mix of a consumption and an income tax in that more small businesses can expense assets including inventory, individuals have savings deductions, but there are also deductions for mortgage interest and charitable contributions and credits for child care.
2. Where is the discussion of how progressive an individual income tax should be? Individuals would have 3 graduated rates of 15%, 25% and 35% with the 35% rate kicking in at $140,000 of income (for MFJ). This seems to be a significant tax rate cut (compared to 2011 and beyond) for high income individuals who otherwise would face a 39.6% rate (but starting at higher than $140,000). Why not recognize that $140,000 of income (at least in Silicon Valley and a few other areas) is not "rich." A recent article on the super rich (based on IRS data) noted that the average income for the 400 "wealthiest" (apparently meaning those with the highest income) was $345 million in 2007. The article notes that while their income has increased, their tax obligations have dropped. Given widening income gaps, it seems odd for a "progressive" income tax plan to cap the top rate at $140,000 of income and for such individuals to be taxed at the same top rate as those making over $100 million (or even over $400,000). NOTE - the changed capital gain structure to exclude 35% of the gain will cause high income taxpayers to have a higher capital gains rate than under current law, but it would still be nice to have the discussion of how progressive the tax system should be and to leave behind the notion that today, "high income" justifying application of the top rate means over $140,000 of income for MFJ.
3. True simplifications: There are some in the Wyden-Gregg proposal including repeal of the individual AMT, repeal of phase-outs of itemized deductions and personal exemptions, and repeal of a deduction for miscellaneous itemized deductions (although it would be nice to see some allowance for deduction of unreimbursed employee business expenses). Elimination of the phase-outs should have been accompanied by a rate increase rather than a rate decrease though.
4. Compliance simplification: Providing a system for the IRS to prepare returns is a great idea. The IRS already has the necessary information for many wage earners. Some other countries have been doing this for years. The GAO issued a report on Alternative Filing Systems in 1996!
5. Overlooked opportunities for simplification, transparency and equity: Just a few to note. Some higher education tax breaks are consolidated. BUT, why have any if the goal is to simplify and make the law more fair? These tax breaks make the law more complicated. The US Government already handles grants for higher education - why not just consolidate them all under the Dept of Education. That would also increase transparency because you could just look at that department's budget to see how much the government spends on higher education. Also, in the form of grants and scholarships, the higher ed assistance comes at the right time - before the semester begins, not after April 15. Also, why keep the deduction for charitable contributions? This provides a greater subsidy to higher income individuals? Why keep the mortgage interest deduction in its current form? Where is the fairness in the government subsidizing mortgages up to $1.1 million and on a second home and on home equity debt?
6. Corporate reform: The proposed drop to a flat rate of 24% is a surprise. Because of the call for further study on what the authors call "corporate welfare" it is not entirely clear how the lower rate will be paid for.
7. Small business: Proposed expensing of business assets including inventory if gross receipts do not exceed $1 million is a helpful simplification. The inventory one though is misleading because the IRS has been letting businesses do this for year. Revenue Procedure 2001-10 allows businesses with gross receipts of $1 million or less to use the cash method and treat their inventory as if it were supplies.
8. One-page tax form: I'm disappointed to see this stressed as if this is the key indication that simplification has been achieved. THE SIZE OF A TAX FORM SAYS NOTHING ABOUT HOW SIMPLE OR COMPLEX A SYSTEM IS! Today's income tax can be filed on a postcard. It just depends on how much detail Congress wants the IRS to have. Take a look at the Wyden-Gregg form and the terminology used. Is it really simpler? The form is not the best way to judge simplicity. Also, simplicity is just one principle for a good tax system.

I'm glad to see the proposal as it could help get a discussion on tax reform underway. Will Congressman Rangel be reintroducing his H.R. 3970 of the 110th Congress (the "mother of all reforms")? It would be good to see tax reform being discussed in the House Ways & Means Committee. I think a better starting point would be to analyze the current system to identify its weaknesses. Applying principles of good tax policy to it is a good way to start.

And, what would it take to get major tax reforms enacted? I took a stab at that question back when Congressman Rangel introduced H.R. 3970 - here.

What do you think?

Pension Funding Gap and the States

This month, the Pew Center for the States released a report, The Trillion Dollar Gap, describing the reality that state pension, health care and other retirement plans pose promises of $3.35 trillion but states only have $2.35 trillion to pay for the benefits. As described by the authors of the report:

"To a significant degree, the $1 trillion gap reflects states’ own policy choices and lack of discipline: failing to make annual payments for pension systems at the levels recommended by their own actuaries; expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and providing retiree health care without adequately funding it."

The report notes that while California's plans are over 80% funded, there are still fiscal issues. "California has failed to consistently pay the actuarially required contribution, spurring a funding decline from a $9 billion pension surplus in 2000 to a $53 billion unfunded liability in 2007, based on the most recently available data."

This all unfortunate news (although states certainly should have been aware of funding issues without release of the report) means that states have no only current budget issues, but ones that will continue to make it difficult to balance state budget in the future.

While tax reforms are needed in many states, particularly California, the Pew report is a reminder that a variety of spending issues also need attention. The pension one is a big one.

"Amazon" tax bill back in action in California

Despite veto by Governor Schwarzenegger in July 2009 (AB 178) and the reality that it won't improve tax collections (and may make them worse - more on this later), legislators are reconsidering the so-called "Amazon" tax bill (ABX8 8). The Senate passed it on February 18 (23-15) and the Assembly is to vote on it on February 22, 2010.

Basically, the goal is to get some remote vendors to collect the sales and use tax rather relying on California consumers to self-assess and pay the use tax they owe. Certainly, collection is easier and more likely when the state collects from several thousands of vendors rather than from millions of consumers. But, the bill is unlikely to work. Vendors, such as Amazon and Overstock, will most likely follow practices in Rhode Island and North Carolina that enacted similar bills, and just cancel their contracts with California affiliates so they are no longer subject to the bill. So, the state will have to continue to rely on consumers paying their use tax. Time and money would have been lost that could have been devoted to implementing better use tax collection strategies. Also, the California affiliates do earn income from the web links on their webpages which they hopefully are paying income taxes on. That income tax revenue will be lost with the cancellation of the affiliate contracts.

A few observations:

1. When Governor Schwarzenegger vetoed the version of AB 178 that reached his desk in July 2009, he said he didn't want to impose more taxes on Californians. This illustrates the very weak understanding of the "use tax" even among elected officials. These "Amazon tax" bills are NOT tax increases!!! All they attempt to do is to get more vendors to collect sales/use tax from customers rather than relying on mostly non-compliance consumers to self-assess their use tax.
2. There are better approaches. I've written about this several times: (1) 12/24/09 post on ways to collect the use tax without the "Amazon bill" approach; (2) Problems with the Amazon approach, and (3) "Challenges in Collecting the Use Tax."
3. I'm amazed at the amount of money some affiliates (the ones with the links on their websites to Amazon, Overstock and other vendors who pay a commission) appear to be making. I came across one today where the person said such affiliate income represented about 90% of his family's income! Hopefully income and business license taxes are being paid.
4. Many affiliates seem to be organized and use that structure to fight "Amazon bills." For example, the Performance Marketing Association is calling upon affiliates to contact California legislators to voice their opposition to ABX8 8. They call it the "ad tax." I think that is interesting. That is also a big question. Are these affiliates merely advertising, which seems to be the intent because they really have no authority from Amazon or other online vendors to sell products (they are not sales agents). But some of these pages do seem to be encouraging people to buy certain items (specific books) and they earn commissions from Amazon. Is that solicitation? If it is, an "Amazon bill" isn't needed as these affiliates would already be giving Amazon and other vendors a physical presence in the state. But, the contracts are likely worded as such to make it difficult to prove solicitation.
5. I'd like to see the affiliates organize to help promote better use tax compliance. Perhaps if they did, legislators would not keep coming back to the "Amazon bill" approach. Why don't California-based affiliates remind Californians (and perhaps all customers) of the use tax and put a link on their website to the CA Board of Equalization information on paying use tax - "Your Use Tax Responsibility." This could be a great public service, particularly for non-profits, such as PTAs and home and school clubs who would indirectly benefit from more people paying their use tax (the state would have more money for K-12). Better yet, why don't the states join together to create a single website with the use tax information for every state and make it easier for affiliates (and others) to put that public service information link on their website.

Unfortunately, the "Amazon bill" (currently ABX8 8) won't solve use tax collection or budget shortfall problems in California. There are better approaches to both addressing the budget shortfall and moving California's tax system into the 21st century. I recently had an opportunity to suggest some ideas to the Assembly Revenue & Taxation Committee - see link to 1/13/10 testimony here.

Senators Wyden and Gregg to Introduce Tax Reform Plan

On February 27, 2010, Senator Wyden (D-OR) announced that he and Senator Gregg (R-NH) will introduce a proposal next week they have been working on for two years to reform the federal tax system. Per Senator Wyden, this will be "a comprehensive tax reform bill that will make the federal tax code simpler and fairer for all Americans and businesses of every size." He implies that this will contribute to the discussion on how to address the 2001/2003 tax cuts that expire at the end of this year.

I hope they are correct. It would be a shame to miss what should be a good opportunity, with the expiration of the tax cuts this year, to have a discussion on how reform of the entire system - such as broadening the base to enable lower rates than we'd otherwise have in 2010, would be good. But, I'm doubtful this discussion will take place when the Administration and apparently a majority of Congress (given the recent enactment of new Paygo legislation) are not worried about how to pay for making the tax cuts permanent (other than for high income individuals) because they are using a baseline that "continues current policy" meaning it is assumed that they will be made permanent.

I think any possibility of tax reform will require:

1. A more honest discussion in Washington that the tax cuts only remain if re-enacted and how much that costs (using a real baseline).
2. Public awareness campaign on how the law really works including that the tax cuts are expiring, how much the numerous special deductions, credit and exclusions "cost" and how the tax law could be simpler, more equitable and more neutral and efficient if we eliminated many of these (rather than continually adding more) and kept the lower rates.

What do you think the prospects are for major tax reform this year?

Transparency and the FY 2011 Budget Proposal

Actually, the title above should be "lack of" transparency. I've got a short article in today's AICPA Tax Insider that looks at six ways that the Administration's FY2011 budget proposal violates President Obama's pledge for greater transparency. The details are in the short article, but here are the 6 ways:

1. Hiding the marginal rate with phase-outs and a new 28% cap on deductions and retaining the AMT.
2. Not being clear on who pays taxes - the proposed financial crisis responsibility fee will ultimately be paid by customers, shareholders and employees; the explanation should be clear about that.
3. Unclear tax policy - for example, there are several international tax reforms proposed without explanation of what the goal is, why they differ from last year's proposals and how they will improve international competitiveness of US firms.
4. Baseline confusion - the baseline used to show the cost of proposals assumes that certain tax cuts will be enacted; that's dishonest (even though it is referred to as "honest" budgeting.
5. Hidden spending - while some spending will be frozen for three years, the spending that is buried in the tax law (special deductions, credits and exclusions) is not capped and is likely to grow.
6. Nonunified budget - because some spending is in the tax law rather in agency budgets, it is hidden. For example, you can't look at the Dept. of Education's budget to see what the federal government spends on higher education because some of the federal spending is in the tax law in the form of special credits and deductions, such as the Hope Scholarship credit and its proposed larger replacement, the American Opportunity Tax Credit.

President Obama and the OMB are not the first to give us non-transparent information. I think we should though take the opportunity President Obama has opened up by stressing transparency and demand it throughout the federal budget and in presentations of data.

Any other areas of non-transparency you are aware of?

Again, here is the full article - here.

"Broad-based consumption tax" - 21st century necessity?

The Wall Street Journal for today (Feb. 8) includes an op ed (Toward a Different Fiscal Future) by economist Glenn Hubbard who previously worked in the Council of Economic Advisers for George W. Bush. Dr. Hubbard points out the serious issues in the US budget that are not sustainable even with an income tax increase for high income individuals (who are only about 1% of the public).

One of his suggestions is for a "broad-based consumption tax." He doesn't state what this would be. I'd guess that the supporters of the Fair Tax will jump on this suggestion and say it should be the Fair Tax. Of course, that group advocates the Fair Tax as a replacement for today's income, payroll and estate/gift taxes, not as an add on. Dr. Hubbard is noting the need for an add-on due to deficits and continued spending desires as well as mandatory spending items in the federal budget. He is not the only one to suggest this. Paul Volcker has also suggested the need for a VAT (which is a broad-based consumption tax).

Does this make sense as a way to move our tax system into the 21st century? Well, yes and no.

Yes, we have deficits, growing debt and lots of spending that no one seems to want to seriously reduce or even freeze (President Obama proposes to only freeze a very small percentage of spending for three years). Someone has to pay for this. "Broad-based" means that everyone would pay. That would be true if we had a VAT. Every time you bought a good or service, you'd pay the federal VAT. If designed as a credit-invoice model that most of the rest of the world uses (in addition to income taxes), businesses would also pay VAT. However, businesses would get their VAT rebated to them. So, the VAT is a much better form of sales tax than our sales tax which businesses do have to pay, but economically and technically, should not. The consumption taxed should only be final consumption of consumers.

The typical concern raised about a US VAT is that it would be a "money machine." Opponents suggest that it would be too easy to raise the rate and generate lots of money. I don't know how true that is because this tax would affect 100% of voters (rather than the 1% affected by any tax increase on those making over $250,000) so I think it would be politically difficult to keep raising the rate. Of course, then it might be easier for legislators and the President to tell voters that the alternative to a VAT rate increase is to cut spending.

Any benefits of a VAT? I think it would really help the states because they could replace their sales tax with the federal VAT by just adding on to it. The state rates could be lower and the pyramiding that exist with the state sales tax would end. Relief to address the regressivity of the VAT could be down with refundable income tax credits (federal and state) which would avoid giving VAT breaks to high income individuals. Also, the rest of the world (mostly) uses a VAT. Perhaps there are advantages to using it, such as allow for exports to be tax-exempt and imports to be taxed.

And, yes, if spending can't be better controlled, the feds have to find revenue somewhere.

BUT, I hope that alternatives would be considered because the VAT rate would likely have to be high and would adversely affect many low and middle income taxpayers. We have a significant and growing deficit. Why are new tax breaks being added for individuals - such as the American Opportunity Tax Credit, or increases in existing tax breaks. Just as President Obama says we need to freeze spending for 3 years, we need to freeze spending that exists in the tax law.

Also, adding more tax breaks just makes the system more complicated than it needs to be.

What type of "broad-based consumption tax" do you think is appropriate, if any, at the federal level? What about the alternatives that can still help to reduce our deficit and debt?

btw - the National Taxpayer Advocate's annual report to Congress for 2009 includes a report on administrative issues of a consumption tax, such as a VAT or national sales tax (Volume II, page 35). Fortuitous?

Complexity of Simplified Sales Tax

I finally just had a moment to read the background materials for a 1/20/2010 SSUTA meeting that dealt with vendor compensation for collecting state sales and use taxes. Some of the discussion questions are interesting in that I think they raise the issue of whether the SSUTA has made sales tax compliance simple enough such that Congress should allow adopting states to make remote vendors collect.

Here are a few of these discussion questions that, I think, raise additional issues beyond vendor compensation approaches.

1. "How do you determine who is a volunteer seller and who is a nexus seller initially and going forward?" I think this implies that it is not always clear when a seller has nexus in the state. And generally, that is true.
2. "Should additional compensation be required in states with more complex tax structures? What complexity factors should be considered?" Why would an adopting state's tax structure be more complex than others? If this is the case, then wouldn't it still impede interstate commerce to make a remote vendor have to collect from customers in the states with the more complex tax structures? If yes, Congress should not allow adopting states to require remote vendors to collect tax. I think this question might mean that additional simplifications are needed, such as one rate per state.

What do you think?

Tax System Challenges of Odd Budget Processes

Congress has passed H. J. Res. 45, the Statutory Pay-As-You-Go Act of 2010 (2/4/10). While it sounds good - basically, tax cuts should be offset by certain types of spending cuts or other tax increases, it has an enormous whole in it. PAYGO won't apply to tax changes that are considered part of "current policies."

Here is the section of the resolution: "ADJUSTMENT FOR CURRENT POLICIES.
(a) Purpose- The purpose of this section is to provide for adjustments of estimates of budgetary effects of PAYGO legislation for legislation affecting 4 areas of the budget--
(1) payments made under section 1848 of the Social Security Act (referred to in this section as `Payment for Physicians' Services');
(2) the Estate and Gift Tax under subtitle B of the Internal Revenue Code of 1986;
(3) the AMT; and
(4) provisions of EGTRRA or JGTRRA that amended the Internal Revenue Code of 1986 (or provisions in later statutes further amending the amendments made by EGTRRA or JGTRRA), other than--
(A) the provisions of those 2 Acts that were made permanent by the Pension Protection Act of 2006 (Public Law 109-280);
(B) amendments to the Estate and Gift Tax referred to in paragraph (2);
(C) the AMT referred to in paragraph (3); and
(D) the income tax rates on ordinary income that apply to individuals with adjusted gross incomes greater than $200,000 for a single filer and $250,000 for joint filers."

These are some costly provisions - 2 years of the AMT patch (2010 and 2011) and reinstatement of the tax cuts for individuals with income under $250,000 ($200,000 if single).

This doesn't really seem quite honest. It also enables Congress to enact lots of tax cuts that are not paid for. This means the deficit will go up as will the debt and interest expense and someday, someone will have to raise taxes to pay for this. Enacting PAYGO with big holes in it is like someone saying they are going to only spend within their income level, while at the same time running up their credit cards to pay for extra spending.

I was really thinking that the high cost of keeping any of the 2001/2003 tax cuts would cause Congress to have to enact some major (or at least significant) reforms of the income tax. Such reforms would "mask" the reality that when the tax cuts expire after 2010, there is, in effect, a tax increase for everyone. Reform could have included a thorough review of all special deductions, credits and exclusions to see if any are not needed or can be cut back to better meet their intended purpose and to be made more equitable.

This deceptive PAYGO provision is really a way to run up an already high deficit and debt, and avoid the tough job of modernizing and improving our federal tax system.

What do you think?

AB 1178 Sales Tax Exemption on Textbooks - Wrong Way to Go!

AB 1178 has passed in the Assembly and gone to the Senate. This is too bad for good tax policy. AB 1178 includes a state level sales tax exemption for textbooks and supplies purchased by a student of a UC, CSU or community college between July 1, 2011 and December 31, 2014. [Click here for Board of Equalization analysis of AB 1178.]

The problems:

1) Makes the tax laws more complex: Can you imagine the complexity involved? Stores will have to verify that the buyer is a student in a public higher education institution and that the items are for school. And the store must still charge the local sales tax. This really complicates compliance for sellers of books and supplies - and that's a lot of businesses (college bookstores, Office Depot, 7-11, Costco, Borders, Safeway, etc.).

What if a student at a private college also takes a course at a public university? They will have an ID card from the public university. Is the store required to review their course syllabi or get a note from the professor to verify what is required for a class?

What if the supply is an iPod which will also be used personally?

This is NOT the way to write a tax law. Whenever there are special exemptions, rules are needed to define who gets that exemption and what exactly is exempt. That is complicated for both vendors and tax administrators.

2) Savings might not all go to the student: While the sentiment behind the bill - reduce cost of textbooks sounds good, it won't work. When stores are setting their prices, they are most likely to factor in that the students won't have to pay state sales tax on the item, so they can increase the price of the textbooks a bit.

3) Equity issue: Many students can easily afford textbooks and sales tax. This partial exemption doesn't factor in the income of the buyer. So, even wealthy students get a tax break.

4) Not needed: Students usually have lower cost options for acquiring books. Many find great deals online. Often they can buy a used book. They might also share a book and some schools have book rentals. Also, if a student in California gets an electronic copy, our sales tax already exempts that book (which is a flaw in the law).

5) Dishonest budgeting: This is deceptive by lawmakers. If they are concerned about costs for students in public higher ed, they should increase the funding that goes to these organizations so that fees do not need to be increased as much, so students can graduate earlier because more courses can be offered, etc. When lawmakers already control the funding of higher ed, there is absolutely no need to create a complicated, inequitable and unnecessary tax rule to reduce costs for students. They should use the budget line item instead.

I hope this bill is defeated by the Senate and if not, is vetoed by the Governor. Let's not make the California tax system worse than it needs to be and let's encourage legislators to reduce costs for college students by increasing funding for the UC, CSU and community colleges by an amount equal to the estimate of the tax dollars that would be lost from this inappropriate exemption.

Note: At least 9 states have exemptions for sales tax. I found a list at the Barnes & Noble website, which also includes instructions to student buyers that indicates the compliance complexity of such an exemption - here (see bottom of the bn.com page).

What do you think?

S Corporations and the Tax Gap

In December 2009, the GAO released a report, Actions Needed to Address Noncompliance with S Corporation Tax Rules, detailing a variety of errors found on S corporation returns. These include:

• misreporting income
• shareholders claiming losses greater than their basis
• deduction of personal expenditures
• not paying adequate compensation to employee-shareholders

The income misreporting problem generates at least an $8.5 billion annual tax gap. The GAO found that the error rate among returns prepared by paid preparers was not much different from returns that were self-prepared.

I've got a short article on the report, and the relevance of the key findings - S Corporations, Complexity and the Tax Gap, AICPA Corporate Taxation Insider (1/28/10).