Fraud Tip of the Day - April 2
Select a Tax Preparer You Trust!
Tax preparer fraud refers to people that file income tax returns with inflated expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. These tax preparation "professionals" also manipulate income figures to help their clients get tax credits they shouldn't, such as the Earned Income Tax Credit.What's scary is that you may have no idea that the person preparing your taxes is even doing it. Tax preparers want your return business, no pun intended, and an unscrupulous one might go to extreme lengths to look good in your eyes. Claiming false expenses, deductions, exemptions and credits on your tax returns to "help" you save money is a great way to do this. The problem is that when the IRS finds out that fraudulent claims were made on the return, you will have to pay the additional taxes and interest and may be subject to penalties and criminal prosecution.
While most preparers provide first-rate service to their clients, the IRS urges taxpayers to be very careful when choosing a tax preparer. You should be as careful as you would in choosing a doctor or a lawyer. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.
IRS cautions taxpayers to be wary of claims by preparers offering larger refunds than other preparers. Check it out with a trusted tax professional or the IRS before getting involved.
Tax evasion is a risky crime, a felony, punishable by five years imprisonment and a $250,000 fine. Remember, when the IRS identifies a tax return as fraudulent they go after the client and not the tax preparer. You can point fingers at your tax preparer all you want. The IRS is going to be knocking on your door, not your tax preparers.
Helpful Hints When Choosing a Return Preparer
- Avoid tax preparers who claim they can obtain larger refunds than other preparers
- Avoid preparers who base their fee on a percentage of the amount of the refund.
- Use a reputable tax professional who signs your tax return and provides you with a copy for your records.
- Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after the return has been filed.
- Review your return before you sign it and ask questions on entries you don't understand.
- No matter who prepares your tax return, you (the taxpayer) are ultimately responsible for all of the information on your tax return. Therefore, never sign a blank tax form.
- Find out the person's credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
- Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
- Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?
