It’s tax season and for millions of Americans, that means tracking down a professional to help them with their return. If it’s your first time doing your taxes or you’re planning on using someone different than you have in past years, you need to make sure you choose a trustworthy individual to handle the job. Tax scams occur all too often and many of them involve preparers who use less than ethical tactics to try and get more money out of their clients. When you’re shopping around for a tax pro, here are six warning signs to watch out for so you don’t end up with a phony.
Many tax preparers claim to be able to get their clients more money back but there’s a fine line between a sales pitch and outright deception. If the person you’re considering is able to back up their claims with hard figures on the average refunds they’ve gotten for clients in the past, then it may seem a little more convincing but you shouldn’t let yourself be swayed automatically.
One of the most pervasive scams involves preparers who fraudulently claim credits or deductions that you’re not eligible for in order to bump up the size of your refund check. By the time the IRS comes calling to tell you there’s a problem, the person who prepared your return is long gone, along with the cash you paid them for their services.
Unless you’re taking advantage of one of the free tax assistance programs out there, you’re going to have to spend a few bucks to get your return done. Tax professionals generally charge by the hour, and the more complex your filing is the more you can expect to pay. If you run into a preparer who says they base their fees on the size of your refund, that should send up a big red flag. In order to get their hands on more of your money, they could be falsifying the information on your return to generate a bigger refund check.
While you’re ultimately responsible for all of the information that’s included in your return, that doesn’t mean the person who prepared it doesn’t have to sign it. They should also be including their tax preparer identification number, which is issued by the IRS. If they flat out refuse to do so, it’s probably a good idea to steer clear of them altogether to avoid potential problems.
When you’re looking for a tax preparer, you want to take the time to do a little investigating before you hire someone. Asking a few basic questions about their background can give you an idea of whether or not they’re reputable. If you’re interviewing a preparer who’s reluctant to share information about their professional history or won’t verify whether they have a tax preparer ID, that should tell you everything you need to know about how they operate. Even if they’re being pretty forthcoming, you should still check with your local Better Business Bureau to see if any complaints have been lodged against them.
There’s nothing more depressing than owing even more money to Uncle Sam after you’ve had taxes withheld from your paycheck all year. The only exception might be finding out that your tax preparer has altered your return to generate a refund and pocketed the cash without telling you.
With this kind of scam, the preparer completes your return and tells you that you have a balance due. Instead of advising you on where to send the payment, they have you cut them a check for the amount you supposedly owe, along with their fee. Once you’ve signed off on the return, they go back and change the numbers to make it look like you’re actually owed a refund. Once the check comes in, they get the money and you get nothing but the headaches of having to sort out the mess with the IRS.
Before you sign your tax return, you should take the time to read over it carefully to make sure all of the information is correct. Any time a tax preparer tells you it’s okay to sign before they’ve even started punching in the numbers, that should tip you off that something’s not right. Under no circumstances should you ever put your signature on a document that you haven’t read, or worse, hasn’t even been filled out.
This post was published on January 13, 2015