How to Avoid Income Tax Preparer Fraud

Keeping updated on new tax laws and regulations is often a task left to the income tax preparer. New guidelines and rules for filing income tax returns are introduced regularly. Selecting an income tax preparer who is qualified to prepare returns and who adheres to the IRS guidelines by avoiding fraudulent activities involves the steps listed here.

Instructions

Difficulty: Moderate

1. Provide your tax preparer with accurate information when preparing your income tax return. They are limited by what information you supply to them when performing calculations. Mistakes occur when your information is unclear or incomplete, forcing the preparer to submit information that can later be disputed once the actual numbers reported are reviewed.
2. Keep copies of all your receipts and returns in a file for at least seven to 10 years.
3. Review your return data prior to submission to the IRS. If your income tax preparer inaccurately lists your expenses, have him make the corrections. The same holds true for yearly income reporting. A trustworthy income tax preparer will rely strictly on the data supplied and not exaggerate the numbers to generate a larger tax refund or reduce taxes owed.
4. Read the free income tax guidelines provided by the IRS to determine the tax you should expect to pay for your earned income. If a tax preparer advises you of a lesser amount that is not substantiated by the documents you provided, they may be committing fraud.
5. Avoid income tax preparers who lean towards gauging your fees based on your refund amount. This is a red flag for possible fraudulent activities.
6. Ask about the reputation of the tax preparer before committing yourself. See if their other clients are pleased with their work and ethics. Avoid tax preparers who don't give referrals. Seek an established preparer.

Tips & Warnings

• Remember you, the taxpayer, are responsible for all information reported to the IRS and ensuring its accuracy.