It is after the holiday season, and your funds are running
low. You receive your W-2s from your job and other tax documents, and you are
ready to file your tax returns so that you can get some relief for your
household budget. Plus, there’s this new gadget that you have had your eye on
that nobody got you for Christmas. Valentine’s Day is coming up, and you still
have not gotten your sweetie a present yet. Wait! You remember seeing a sign
down the street for this tax office that promises to get you back at least
$5,000 and that you will have your money within 3 days. In your mind they have
signs out front, are in a building, and come to the same spot each year. Well,
you think that’s the same company that shows up each year. They have to be
legit, right? You begin to gather your things to head to that tax office to get
the $5,000 that they promise.
Many taxpayers similar to the one in the scenario above face
this issue year after year. Matter of fact, the Internal Revenue Service (IRS)
states that 60 percent of taxpayers use tax professionals to prepare their
returns each year. With the increased volume of identity theft issues and tax
scams, it is more important than ever that taxpayers use reputable and honest
professionals to give their personal information to during the tax preparation
process.
Return Preparer Fraud continues to reside on the IRS’s “Dirty
Dozen” list of Tax Scams to Avoid this year. To aid taxpayers in avoiding the
unscrupulous tax preparers that steal from their clients and misfile their
returns, the IRS has provided a list
of tips that taxpayers should use when choosing a tax preparer. Here are a
few of those tips:
- Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on your filed tax return.
- Ask about service fees. Preparers are not allowed to base fees on a percentage of their client’s refund. Also avoid those who boast bigger refunds than their competition. Make sure that your refund goes directly to you – not into your preparer’s bank account.
- Ask to e-file your return. Make sure your preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must offer electronic filing. The IRS has processed more than 1.5 billion e-filed tax returns. It’s the safest and most accurate way to file a return.
- Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask questions to determine your total income, deductions, tax credits and other items. Do not rely on a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.
- Make sure the preparer is available. In the event questions come up about your tax return, you may need to contact your preparer after the return is filed. Avoid fly-by-night preparers.
- Understand who can represent you. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Non-credentialed tax return preparers can represent clients before the IRS in only limited situations, depending upon when the tax return was prepared and signed. For all returns prepared and signed after Dec. 31, 2015, a non-credentialed tax return preparer can represent clients before the IRS in limited situations only if the preparer is a participant in the IRS Annual Filing Season Program
- Never sign a blank return. Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.
- Review your return before signing. Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
- Report tax preparer misconduct to the IRS. You can report improper activities by tax return preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov.
Here's a video from the IRS on how to choose a tax preparer.
If you suspect that a tax preparer has committed fraud or violated the rules in some other way, learn how to submit a complaint here. Good luck this season!
