Tax Fraud - Tax Professional Preparer Scams

Beware! Not all professional tax preparers have your best interest at heart. Some will throw in stealing your money as part of their service.

While there are many legitimate professional tax preparers who have solid reputations, not all tax preparers have your best tax interest at heart. Unscrupulous and unethical tax professionals use customers to make money by redirecting some of the taxpayer's refund to their own accounts. They also have a tendency to charge higher fees and use the advertising of guaranteed larger refunds to attract more clientele.

When searching for a professional tax preparer keep the above items in mind. And it's so important to remember that no matter who does your return, you're the one who's on the hook for everything on the tax form sent to the IRS on your behalf.

Looking Good - at your expense

Most tax preparing professionals feel a need to justify their services to taxpayers. And they do this by preparing a tax return that gives you the most value by paying the lowest possible tax. While there are plenty of ways to do this legally, a few tax preparers go beyond what's indicated in the U.S. tax code. They put down deductions that aren't legal, excessive tax exemptions and/or credits that aren't allowed in your particular case. Really crooked tax professionals will employ all three of those methods in order to give you a tax return that looks too good to be true.

The tax law is cumbersome, complicated and most people don't take the time to read or understand it. So when presented with a return higher than you thought you were going to get, it's very tempting to go along with it. After all...you did hire a professional who must know more than you do about how to maximize the deductions available to you. The problem with that is even if you don't know your tax preparer has done something illegal, you're held ultimately responsible for your return and what's sent to the IRS.

Prior to hiring a professional tax preparer, research their background and ask for independent references you can double check. We suggest asking friends and family for names of the people who do their taxes and if they would recommend them. Key items to find out are if they've ever been disciplined by the state or federal government and/or convicted of fraud. If so, you'll want to know so you can steer clear.

The Bottom Line

Please always remember, tax preparers can save you money by taking advantage of legal deductions you were unaware of, however, they can also get you into a lot of trouble too.

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