You’ve heard it before. Since it’s tax time, you’ll hear it again. Choose your tax preparer wisely.
This past year has been difficult for most of us as we were on the verge of a recession. Prices are skyrocketing for everything from the cost of housing to groceries. With the new tax filing season approaching and tax return prices on the rise, it’s time to gather the important documents, receipts, and forms to file your taxes. If you are looking for someone to help you with tax preparation, it’s important to choose this person carefully! Some “tax preparers” may take advantage of you and file a fraudulent tax return in your name. If the return is flagged by the Internal Revenue Service, YOU are the one held accountable, not the person who filed the fraudulent return.
According to the IRS, “Return Preparer Fraud generally involves tax return preparers who prepare and file false income tax returns based on inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients” or they “may manipulate your income figures to fraudulently obtain tax credits, such as the Earned Income Tax Credit.” In many cases you, the client, may have no knowledge that a fraudulent claim has been filed in your name. If the IRS detects the false return, however, you will be the one who has to pay the additional taxes, interest, and penalties.
The IRS Return Preparer Program focuses on enhancing compliance in the return preparer community by investigating and referring criminal activity by return preparers to the Department of Justice for prosecution and/or asserting appropriate civil penalties against unscrupulous return preparers.
While most preparers provide excellent service to their clients, the IRS urges taxpayers to be very careful when choosing a tax preparer. Taxpayers should be as careful as they would be in choosing a doctor or a lawyer. It is important to know that even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the tax return
Helpful Hints When Choosing a Return Preparer
- Be careful with 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.
- Only 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 tax return has been filed.
- Review your return before you sign it and ask questions about 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?
In case you didn’t know, the IRS regularly prosecutes accountants involved in tax evasion. Law enforcement efforts continue to eradicate fraudulent tax preparation services nationwide.
If a tax accountant submits a false income tax return, it is tax evasion. These types of scams are frequently reported on IRS Dirty Dozen Tax Scams. Since the pandemic hardship has rocked the economy, everyone from individuals to businesses have struggled to repay loans. Make sure you use a reputable professional to prepare your tax returns or financial statements.
If you suspect tax fraud or know of an abusive return preparer
If you suspect tax fraud or know of an abusive return preparer, report this activity using IRS Form 3949-A, Information Referral. You can download Form 3949-A from the IRS Web site at IRS.gov or call 1-800-829-3676 to order by mail. Send the completed form, or a letter detailing the alleged fraudulent activity, to Internal Revenue Service, Fresno, CA 93888. Please include specific information about who you are reporting, the activity you are reporting and how you became aware of it when the alleged violation took place, the amount of money involved, and any other information that might be helpful to an investigation. Although you are not required to identify yourself, it is helpful to do so. Your identity can be kept confidential. You may also be entitled to a reward.
Remember, the bottom line is this: no matter who prepares your tax return, you, the taxpayer, are ultimately responsible for all of the information on your tax return. Choose your tax preparer wisely!