With the federal tax deadline just two weeks away, many will be looking for someone to do their taxes.
But it’s also the time when many get into trouble by hiring the wrong tax preparer.
The Internal Revenue Service says about 60 percent of filers use one, but the federal government says beware of those looking to make a quick buck
Greg Dunn, CEO of the Better Business Bureau Hawaii, says “The IRS has seen an uptick in preparer-related fraud and they’re trying to help the consumer understand that not every preparer out there has your best interest in mind.”
Dunn said his office gets dozens of inquiries about tax preparer fraud each tax year.
Some are known to charge clients a percentage of their tax refund, then prepare false returns in order to inflate that amount. If that preparer is preparing the information for you, and you sign a blank tax return and that person puts down fraudulent information that you are testifying on that statement that is true without you knowing what’s there, you can be held liable for the tax liability and penalties.
Last year, a Maui man was permanently barred from preparing federal tax returns for others after he was busted for filing more than a thousand false returns for five years straight.
The IRS estimated that during that period, that so-called “preparer” potentially got away with over $31 million in tax liability that the IRS says was stolen from the U.S. government.
Dunn said you also open yourself up to identity theft if your financial information gets in the wrong hands.
So how can you avoid falling victim?
- Never sign a blank return. You should always look it over before signing it.
- If you’re expecting a refund, it should never be deposited into a preparer’s bank account.
- Don’t use a preparer who mischaracterizes your expenses or claims tax credits you’re not entitled to. That could land you in trouble.
- Make sure your preparer has the proper credentials to prepare returns. If you’re unsure, contact the IRS.
For an IRS directory of federal tax return preparers with credentials and select qualifications, click here.
For free tax preparation from AARP Foundation Tax-Aide, click here.
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