A Tax Tip: Beware of Tax Preparer Fraud

May 2020

An extended tax season due to the pandemic means many people may still be in the process of seeking the assistance of a professional to prepare their returns. The IRS warns taxpayers to choose carefully. Most tax professionals provide excellent service. However, there are some deceitful tax preparers out there who make a living through refund fraud, identity theft, and other harmful scams.

Tax preparer fraud can only leave innocent taxpayers with a mountain of debt, it can put them under scrutiny by the Internal Revenue Service (IRS) and the Franchise Tax Board (FTB).

To protect yourself, be sure to verify the validity of a tax preparer’s credentials. You can check a tax preparer’s qualifications by using the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This directory provides a listing of preparers in your area who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion. You can also verify a tax preparer’s license with the California Tax Education Council, California Board of Accountancy, and State Bar of California.

The IRS and FTB urge taxpayers to avoid a tax preparer who:

• Does not provide you with a copy of your tax return
• Does not exercise due diligence in tax return preparation
• Charges fees on a percentage of your refund or boasts bigger refunds than their competition
• Asks you to sign a blank tax return, or sign a tax return in pencil
• Does not provide a Preparer Tax Identification Number (PTIN) on your tax return
• Refuses to sign your tax return or complete the required tax preparer information
• Is not properly registered or licensed

If you have been the victim of a fraudulent tax preparer or suspect tax fraud, be sure to file a report with the IRS and FTB. To file a report with the IRS, use Form 14157, Return Preparer Complaint. If you suspect a tax preparer filed or changed your return without your consent, you should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.To file a report with the FTB, submit an online Fraud Referral Report.