With today’s insanely complicated income tax code, it’s no wonder many people hire tax preparers.
You might be wise to do so. But don’t be too trusting of people who offer to file your tax return.
Just as some individuals try to cheat the IRS, some tax preparers try to cheat their clients. Choose someone wisely.
“You should be just as careful as you would in choosing a doctor or lawyer,” according to the IRS website. “It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on it.”
Tax evasion – by an individual or preparer – is a felony punishable by up to five years in prison and a $250,000 fine, it says.
The IRS offers tips on choosing a tax return preparer. They include checking out the person’s credentials, getting references and being suspicious of someone who promises you a large tax refund. Anyone who charges to prepare someone’s tax return must have a Preparer Tax Identification Number.
Dirty Dozen Tax Scams
Earlier this month, the IRS released its annual “Dirty Dozen Tax Scams.” They are schemes carried out by filers themselves and by tax preparers. Again, the IRS warns people to be on the lookout for con artists.
“About 60 percent of taxpayers will use tax professions this year to prepare and file their tax returns. Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation and attract new clients by promising guaranteed or inflated refunds…
Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.”
What do you do if you believe you’ve been victimized by a tax preparer?
The IRS asks you to report the person by calling (800) 829-0433.
An article last week in the Los Angeles Times notes that legitimate tax preparers can include national firms such as H&R Block, certified financial planners, certified public accountants and “enrolled agents.” This is a designation granted by the IRS to people who pass a tax exam.
If your income tax return is simple, you may feel comfortable filing it yourself. But if it’s complex, you may prefer to hire a preparer. Just exercise caution in your selection.
“Most return preparers provide honest service to their clients,” the IRS says. “But as in any business, there are also some who prey on unsuspecting taxpayers.”
Everyone wants to save on their income taxes. But don’t fall prey to fraudulent tax preparers who make big promises. They could disappoint you and worsen your tax obligation.