How to Make Sure Your Tax Preparer Files An Honest Return

Unsuspecting taxpayers can fall victim to dishonest tax preparers who file fraudulent returns on behalf of their customers in order to charge a higher fee. Don't let yourself be one of them. Read on for some things to look out for.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Common sense

1. One of the most obvious signs that a preparer may be fraudulent is if he or she charges a percentage of your refund as compensation instead of a flat fee or a sliding scale based on the number of forms that are generated in the return. Preparers that take a percentage of your return will usually add fraudulent deductions or credits that increase the amount of your refund--and therefore the amount that they will get paid.
2. Another warning sign to look for is a preparer that promises you he or she can represent you before the IRS. Only CPAs, Enrolled Agents and attorneys are allowed to do this. If your preparer does not fall into one of these three categories, then you're hearing a line of bull.
3. Never sign a blank tax return for any reason. No legitimate preparer would ever ask you to do this. This opens you up to potential liability for a fraudulent return. The IRS will come after you for a fraudulent return that you have signed, regardless of who prepared it. Of course, they may go after the preparer as well, but that won't get you off the hook. You will be held liable for any amount of refund that you receive that you were not entitled to, along with interest, penalty and criminal charges.
4. Even preparers who promise that they can get you larger deductions than others should be viewed with caution. If they are merely saying that they can often find legitimate deductions that other preparers have overlooked, that's one thing, but if they say that you can get deductions with them that you won't get anywhere else, then they should be avoided.
5. Although it's not a guarantee of legitimacy, many legitimate tax preparers will posssess credentials such as Accredited Tax Preparer or Enrolled Agent. They will also be members of some sort of tax preparers association that fosters professionalism and may provide services such as assistance with continuing education requirements. Of course, not belonging to such an organization hardly means that a preparer is fraudulent, but fraudulent preparers will have little inclination to be part of any tax professional community.