How to Spot a Fake Tax Pro: 6 Red Flags to Watch Out For
Tax season is here, and you may be looking for a professional to help you prepare and file your tax returns. But, not all tax preparers are created equal. Some of them are fake, shady, or incompetent, and they can cause you a lot of trouble and money.
How can you tell if your tax pro is legit or not? Here are six red flags to watch out for:
1. Refusal to give a copy of the client’s tax return to review and for records
A real tax pro will always give you a copy of your tax return to review before submitting it to the IRS. They will also give you a copy for your records and for future reference. This is not only a good practice, but also a legal requirement.
A fake tax pro, on the other hand, may refuse to give you a copy of your tax return or give you a blank or incomplete one. They may claim that they will send it to you later, or that you don’t need it. They may also ask you to sign a blank or incomplete form or forge your signature without your consent.
This is a big red flag because it means that they are hiding something from you, or that they are not confident in their work. It also means that you have no proof of what they filed on your behalf and that you may be liable for any errors, omissions, or frauds that they committed.
For more information and tips on how to spot a fake tax pro, watch my YouTube video below. I shared a real-world example of someone who got duped by an unscrupulous tax pro:
2. Submitting tax return without allowing the client to sign or authorize
Another red flag is when a tax pro submits your tax return without allowing you to sign or authorize it. This is a clear violation of the IRS rules, which state that you must sign your tax return, either electronically or on paper and that you must authorize your tax pro to file it for you, either by using a PIN or by signing a Form 8879.
A fake tax pro may submit your tax return without your signature or authorization, because they want to avoid your scrutiny, or because they want to claim a refund or a credit that you are not entitled to. They may also use your personal information to file fraudulent returns for themselves or for other clients.
This is a serious offense, and it can result in penalties, audits, or identity theft for you. You should always review your tax return before signing or authorizing it, and you should always keep a copy of your signature or authorization for your records.
3. Refusal to answer client questions, such as the estimate
A real tax pro will always answer your questions, such as how they calculated your tax liability or refund, what deductions or credits they claimed for you, or what documents they used to support your tax return. They will also give you an estimate of their fees, and explain how they charge you, whether by the hour, by the form, or by the percentage of your refund.
A fake tax pro, however, may refuse to answer your questions or give you vague or evasive answers. They may also charge you very high fees, or fees that are not transparent or consistent. They may claim that they have a special formula or a secret method to get you a bigger refund, or that they don’t need any documentation or receipts to back up your tax return.
This is a red flag, because it means that they are not knowledgeable, professional, or honest. It also means that they may be making mistakes, taking shortcuts, or committing frauds on your tax return and that they may be overcharging you or ripping you off.
4. Very high fees for basic returns
Another red flag is when a tax pro charges you very high fees for basic returns. For example, if you have a simple tax situation, such as a W-2 income, a standard deduction, and no dependents, you should not pay more than $300 or $800 for your tax preparation and filing. If you have a more complex tax situation, such as a self-employment income, a home office deduction, or multiple dependents, you may pay more, but not excessively.
A fake tax pro, however, may charge you very high fees for basic returns, such as $500, $1000, or even more. They may justify their fees by saying that they have a special expertise, a unique service, or a guaranteed result. They may also base their fees on a percentage of your refund, which can create a conflict of interest and an incentive to inflate your refund.
This is a red flag, because it means that they are taking advantage of you, or that they are not competent or qualified. It also means that you are paying more than you should, and that you may not get the best value for your money.
5. Those who do not open all year round
Another red flag is when a tax pro does not open all year round, or disappears after the tax season. A real tax pro will always be available and accessible to their clients, not only during the tax season but also throughout the year. They will also provide you with their contact information, such as their phone number, email address, or physical address.
A fake tax pro, however, may only open during the tax season, or close shortly after. They may also be hard to reach or contact, or change their contact information frequently. They may use a temporary or a fake address, a prepaid phone, or a generic email.
This is a red flag, because it means that they are not reliable, trustworthy, or accountable. It also means that you may not be able to get in touch with them if you have any questions, concerns, or issues with your tax return, or if you need any follow-up services, such as amendments, corrections, or audits.
6. Those who promise very high refunds
The last red flag is when a tax pro promises you a very high refund, or a refund that is much higher than what you expected or what you got in the previous years. A real tax pro will never promise you a refund, or guarantee you a specific amount. They will only estimate your refund based on your tax situation, and they will explain the factors that affect your refund, such as your income, deductions, credits, filing status, etc.
A fake tax pro, however, may promise you a very high refund, or a refund that is too good to be true. They may claim that they have a secret way, a special connection, or a magic formula to get you a bigger refund. They may also ask you to pay them a percentage of your refund or to give them your bank account information to deposit your refund.
This is a red flag, because it means that they are lying to you, or that they are using illegal or unethical methods to inflate your refund. It also means that they may be stealing your refund, or that they may be exposing you to audits, penalties, or criminal charges.
Conclusion
These are some of the red flags to watch out for when choosing a tax pro. If you encounter any of these signs, you should be careful and cautious, and you should look for another tax pro. You should also report any suspicious or fraudulent tax preparers to the IRS or to your state authorities.
Remember, you are ultimately responsible for your tax return, and you should always choose a tax pro who is honest, competent, and professional. You should also educate yourself about your tax situation, and review your tax return before signing or authorizing it.
Contact my office if you need help with your taxes.
Frequently Asked Questions
- How can I find a real tax pro?
You can find a real tax pro by checking their credentials, such as their PTIN (Preparer Tax Identification Number), their education, their experience, and their reviews. You can also use the IRS Directory of Federal Tax Return Preparers, which lists the tax pros who have a professional credential or have completed the Annual Filing Season Program.
- What should I do if I suspect that my tax pro is fake or fraudulent?
You should report your tax pro to the IRS by filling out Form 14157, Complaint: Tax Return Preparer. You should also contact your state authorities, such as the state board of accountancy, the state bar association, or the state tax department. You should also review your tax return and amend it if necessary.
- What are the consequences of using a fake tax pro?
Using a fake tax pro can result in serious consequences, such as losing your refund, paying more taxes, penalties, and interest, facing audits, or even criminal charges. You are ultimately responsible for your tax return, and you cannot blame your tax pro for any errors or frauds that they committed.
- How can I protect myself from fake tax pros?
You can protect yourself from fake tax pros by being careful and cautious, and by following these tips:
- Always review your tax return before signing or authorizing it.
- Always keep a copy of your tax return and your signature or authorization for your records.
- Always ask questions and get answers from your tax pro.
- Always compare your tax return with your previous years and check for any discrepancies.
- Always avoid tax pros who promise very high refunds, charge very high fees, or refuse to give you a copy of your tax return.
- Always choose a tax pro who is honest, competent, and professional.
