Do Professionally Prepared Tax Returns Have Lower IRS Audit and Adjustment Rates?
Short answer: In a National Taxpayer Advocate analysis of tax year 2021 returns claiming the Earned Income Tax Credit (EITC) that were prepared by paid preparers, returns in its credentialed-preparer group accounted for a smaller share of audits and audit adjustments than their share of filed returns. That is meaningful evidence for that population. It does not show that an Enrolled Agent (EA), CPA, or attorney signature itself makes any particular return less likely to be examined, and it does not establish a general audit rate for all professionally prepared returns.
By Brandon Lynch, EA
What do IRS examination statistics show?
The IRS Data Book examination table reports coverage by tax year and by the type and size of return. Rates differ across those categories. The table is a snapshot: examinations for recent tax years can still be opened or closed, so the reported coverage can change.
That table does not compare returns signed by EAs, CPAs, or attorneys with returns prepared by other paid preparers. The preparer comparison discussed below comes from a separate National Taxpayer Advocate analysis of IRS data.
What did the Taxpayer Advocate find for EITC returns?
For tax year 2021 paid-preparer returns claiming the EITC, the National Taxpayer Advocate reported 3,307,125 returns in its credentialed-preparer group and 12,500,722 in its noncredentialed group. The credentialed group prepared 21% of those returns, while its returns accounted for 9% of the audits (5,912 of 69,127). The noncredentialed group prepared 79% and accounted for 91% of the audits. These are shares within this specific EITC population, not nationwide audit rates for all returns.
The report uses a defined “credentialed” category. It includes practitioners such as EAs, CPAs, and attorneys, and its discussion of Circular 230 also addresses certain other practitioners and Annual Filing Season Program participants. The table should not be presented as an EA-only, CPA-only, or attorney-only result. A paid preparer is not automatically a credentialed professional: GAO-26-108723 explains that paid preparers differ in qualifications and oversight, and the IRS preparer statistics list PTIN holders separately from professional credentials and other qualifications.
What happened after audits?
The same Taxpayer Advocate table reports 3,434 audit adjustments on EITC returns in the credentialed group and 50,592 in the noncredentialed group. Thus, the credentialed group accounted for 6% of reported audit adjustments, compared with 94% for the noncredentialed group. The report also says credentialed-preparer returns in this cohort were adjusted at a relatively lower rate when audited. Audit selection and an adjustment after examination are different outcomes; neither measure by itself proves why the difference arose.
A separate Taxpayer Advocate report described differences in IRS Discriminant Index Function scores for 2020 individual returns by preparer category. Those scores estimate the likelihood that an audit would produce an adjustment. They are modeled indicators, not observed audit outcomes, and should not be confused with the 2021 EITC audit counts.
Does hiring an EA or CPA reduce audit risk?
The available evidence does not establish that credentials themselves cause the IRS to select a return less often. These comparisons are observational. The taxpayers, claims, records, and return issues handled by different preparers may differ, and the published EITC table does not isolate the effect of the preparer’s credential. It cannot predict the examination risk for a particular taxpayer, a delinquent return, or a business return. Professional preparation also cannot prevent an examination.
What the evidence does support is taking preparation quality seriously. The IRS’s paid-preparer due-diligence guidance requires follow-up when information appears incorrect, inconsistent, or incomplete for covered credits and filing status. Those duties apply to paid preparers generally, not just credentialed ones. The IRS also says its preparer compliance program looks at patterns of returns with a high likelihood of errors in those areas. Careful questions, documentation, and correct application of the law are plausible ways to reduce reporting errors; these sources do not quantify how much any one practice changes a taxpayer’s audit probability.
Why does this matter when returns are late?
For taxpayers catching up on unfiled tax returns, the objective should not simply be to get the returns submitted. Missing records may need reconstruction. An IRS-prepared assessment, a notice deadline, or collection activity may affect what needs to happen next. The IRS’s past-due return guidance explains why filing required returns matters; accurate preparation determines what the taxpayer actually reports and supports.
Lynx Tax Advisors approaches tax preparation as more than entering numbers into software. The facts should be checked, unresolved inconsistencies addressed, and the return prepared with the taxpayer’s overall IRS situation in mind. If a separate collection matter exists, filing work may need to be coordinated with IRS collections defense. The right scope depends on the facts and the engagement.
The practical conclusion: TAS found lower audit and adjustment shares for its credentialed-preparer group in a defined EITC population. The evidence supports thoughtful, qualified preparation and a careful review of the return. It does not justify a promise of lower audit risk from a professional title alone.
General educational information, not advice for a particular taxpayer. Audit selection, filing requirements, and IRS outcomes depend on the facts. Reading this article does not create a client relationship.