Tips for Avoiding Fraudulent Tax Preparers

Mindful Money, Money, Mindful Living Network, Mindful Living, Dr. Kathleen Hall, The Stress Institute,, MLN, Alter Your Life

Tax season, a major stress factor for many Americans, is here. As you begin your tax-related research be sure to do a thorough investigation on the tax preparer you are trusting with your financial information.

Preparing our own taxes can be a weighty burden, especially when the IRS tax code is said to be 3.7 million words long, nearly five times longer the King James Bible (788,000 total words). This may explain why 60 percent of Americans hire professional tax preparers. Of course, there’s some risk involved.

While most tax preparers are reliable, there are definitely those that you shouldn’t trust. Tax preparer fraud occurs when a tax preparer alters information without the clients’ knowledge or consent in order to improperly inflated refunds or divert refunds for their benefit. Fortunately, doing research helps prevent such fraud and that’s important since we’re held legally responsible for our own taxes.

Here are some Mindful Money® suggestions for you to consider:

  • The right research. Research the different types of tax preparers. For instance, having a tax preparer that’s a certified public accountant or an attorney is a bonus because they can represent you in an audit. Also, check their credentials through the Better Business Bureau (BBB) or email the IRS Office of Professional Responsibility.
  • Ask plenty of questions. When you meet with them, be sure to ask important questions like: what is their Preparer Tax Identification Number (PTIN), every tax preparer should have one? Ask if they keep up with the daily tax code changes or if they’ll be available for questions even after tax season is over.
  • Wild promises. Fraudulent tax preparers will reel in victims with promises of unusually high tax returns. If they promise higher returns than what other preparers have offered without even seeing your financial records, be wary.
  • Cost and fees. Be cautious of tax preparers that are paid based on your refund amount. They may be more likely to use unlawful practices (such as inflating your charitable donations) in order to increase your refund and their paycheck. Before you hire them, get a cost estimate in writing.
  • Fine print and signatures. Read all the fine print before you sign anything (it’s a simple rule that is commonly skipped). Be sure it’s noted that your tax return will come directly to you and not to the tax preparer. Lastly, be sure they sign their name and PTIN before giving you a copy of your final forms.

Note: If you do find blatant tax fraud you can report it to the authorities by completing IRS forms 14157 and 14157-A.

Share this:

Notify of
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments