Would love to hear from a tax professional to verify this. 

Verifying last 2 years of rental history very important!

As noted above, you need to be mindful of and verify local ordinances when renting by the room.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Is this local ordinance verified by the city and if so, what are the ways around it, like possible SB1033 and condo out the units or something else? 

Instead of relying on anecdotal evidence with your horror story, perhaps do some honest analysis instead.The vast majority of the time a tenant like this will catch up, if the shortfall was caused by a verifiable and temporary issue.

If your state losses are several hundred dollars or more - then pressure your CPA to verify whether these losses are worth filing current state tax returns.

I had a call yesterday with a rep that made me feel confident, but not quite ready to pull the trigger just yet until getting more verified reviews of their track record of returns and service.

This can be verified via an internet search.  

For $295, you can buy a fake identity including id, selfie, tax return, utility bills, credit file, even a phone number where someone will verify employment.