Even though most tax preparers are honest, there are a few that file fraudulent tax returns on behalf of their clients to claim huge refunds. Sometimes, the fraud is conducted without the knowledge of the taxpayer client and sometimes with consent taken through persuasion or deception. There are a few signs that will help you to spot fraudulent tax preparers.
A fraudulent tax preparer may ask you to pay for his/her services on the basis of the percentage of the refund you receive. It means that the larger the refund amount, the more the tax preparer earns. You must never agree to this term, as it may lead to the preparer to file a fraudulent tax return to increase his/her earnings.
Fraudulent tax preparers may tempt you with larger refunds without telling you how they will achieve it and what can be the legal consequences of the fraud. You must remember that even if the tax preparer prepares your return, you are ultimately responsible for the accuracy of information on it. If the IRS discovers fraud, they will hold the signatory liable for it along with the preparer.
Also make sure that:
- Before the filing of your tax return, check the details one last time, especially income figures, deductions and credits.
- You do not sign on a blank return and allow the preparer to file it without your reviewing the information on it.
- You ask for the Preparer Tax Identification Number (PTIN) and keep it in your records.
You should report any tax preparer that you believe in conducting tax fraud to the IRS. It will help many unsuspecting taxpayers from being victimized.