Here are 4 Ways to Find Out If Your Tax Preparer Is a Fraud
The 2021 tax filing season is about to roll out. Millions of Americans prefer to hire a tax professional to prepare their taxes. Hiring a tax professional to tackle your tax filing is the best thing to do as you focus on the other important, income-earning aspects of your life. However, taxpayers are vulnerable to tax fraud from overnight tax preparers. The prevalence of bogus tax preparers must not be ignored at this time of the year. In fact, bogus tax preparers are part of the Dirty Dozen Tax Scams.
Every year, we get requests from taxpayers who the IRS would have told that their returns were not filed correctly or not filed at all. This happens even if they would have been told by their ‘tax preparers’ that everything was fine. When they try to follow up with them, they do not seem to find them anywhere. These taxpayers will be left with an overdue tax bill plus interest – this is after losing the fees they would have paid to these bogus tax preparers…
How do you find out if your tax preparer is a fraud?
1. They are not registered with the IRS
According to the IRS, “Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2022 Preparer tax identification number (PTIN) before preparing returns.” This also includes all enrolled agents.
Therefore, the fastest way to find out if your tax preparer is a fraud is to find out if they have a valid PTIN and look them up on the IRS website. They must be on the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. If you cannot find them here, it simply means the IRS does not recognize them as someone qualified to file a tax return. Whatever they would have told you is a lie. Therefore, before engaging a tax preparer, look them up on the IRS website. You can use their last name and state on the search tool.
2. They promise a too-good-to-be-true tax refund
I will be honest; I also like to tell my clients about good tax refunds they can get after I submit their returns. But there is a time when I hear that some tax preparers out there are promising too much for little work done by the taxpayer.
Did you know? Your tax refund is because of the work you put in through the year. For example, you could be employed and allow your employer to withhold more money towards taxes. By doing this, you may have a bigger refund since you could have allowed more money to be withheld. More so, you can increase your refund by positioning yourself to qualify for certain tax credits and deductions. At the end of the day, a tax refund is merely a reward for your work towards tax planning and strategizing. So, if you did nothing at all to qualify for tax credits and deductions and did not tell your employer to withhold a larger amount each month, where do you think a big refund could have come from? That tax preparer will just be giving you empty promises because they want to take your money.
3. They entice you to claim tax credits you do not qualify for
Beware of tax preparers who ‘sweet talk’ you into claiming someone else’s child, as an example. They may tell you about an opportunity to score free more thousands of dollars before asking you to give them just a small ‘cut’ from the so-called gains. If any tax preparer suggests anything that breaks the law, run as fast as you can. The last thing you need is to allow someone willing to cross the lines to file your return.
4. They ask you to sign a blank tax return form
Unscrupulous tax preparers may ask you to sign a blank tax return form. After you sign, they may fill in whatever they want without your knowledge. Therefore, be vigilant and do not allow them to entice you into doing this. Bogus tax preparers may also ask you to sign off a tax return form without their signature. That is a red flag. Therefore, even if the return form is not blank, check for their signature above your name before signing it.
People have also asked the following.
1. Is the tax preparer liable for fraud?
Indeed, tax preparers can be held responsible for aiding taxpayers to commit tax fraud or evasion. If such charges arise, the tax preparer may permanently lose their license to file taxes.
2. How do I know if a tax preparer is legit?
To know if a tax preparer is legit, check if they have a valid Preparer tax identification number (PTIN). If they do have it, they must appear on the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications
3. How do I file fraud against tax preparers?
The IRS provides protection for taxpayers and the means to report unscrupulous tax preparers. To report a tax preparer for fraud, complete and mail or fax Form 14157, Complaint: Tax Return Preparer with all supporting documentation to the IRS.
4. Can my tax preparer steal some of my refunds?
Yes, a bogus tax preparer can steal your refund. They may do this by replacing your banking information with theirs when you choose direct deposit for a refund.
5. What happens when you report someone to the IRS?
So, someone can easily report you to the IRS if they suspect you are flouting tax rules. If that happens, the IRS will start its own internal processes to determine if the issue should be taken further. If so, they will route the information to specific specialists within the IRS who deal with different issues, for example, hidden offshore accounts. If the case is strong enough, the IRS may send the offender a notice.
