Every tax season, someone will fall victim to a tax preparer fraud scheme. Most incidents occur towards the end of tax season and in low-income neighborhoods. The most common schemes are: inflating personal or business expenses; false deductions or income; and unallowable credits or excessive exemptions. Tax preparer scammers will use these schemes as a way to inflate your refund and keep the money for themselves.
While more than half of Americans will use a tax preparer for their returns, it is still your responsibility to make sure the information submitted is correct. Here are five things that should raise a red flag of a potential tax preparer fraud scheme:
1. The tax preparer is offering to obtain a very large refund for you or a larger refund than you have been told by other CPA firms.
2. The tax preparer is basing their fees on a percentage of the amount of your refund.
3. The tax preparer requires that you sign a blank tax return form.
4. The tax preparer refuses to provide his or her tax preparer identification information.
5. The tax preparer refuses to provide you copies of your tax return.
If you notice any of the above suspicious activity while working with a tax preparer, do not let that individual file your tax return. You should immediately report them to the Internal Revenue Service by using Form 3949-A, Information Referral. This form will ask you to provide specifics about the person and/or firm and details of the suspicious activity.
If you believe you have been the victim of tax preparer fraud, you should immediately contact the IRS and submit Form 14157-A, Tax Return Preparer Fraud of Misconduct Affidavit. This form is similar to the referral form, but is treated like a sworn statement under penalty of perjury.
The best way to avoid tax preparer fraud is to do your due diligence in researching that particular individual or firm and always feel free to walk away if you become suspicious of their behavior.
