A majority of taxpayers engage professional tax preparers to help with their taxes. If you are one of them, the IRS has issued a caution for you to only hire tax preparers who are trustworthy. Tom Jankowski, special agent in charge of the IRS Criminal Investigations field office, in an interview last week said, “As the taxpayer filing the return, you are the responsible party.” If an unscrupulous tax preparer commits tax fraud using your tax return, you will be held responsible. So Jankowski urges you to “Research [your preparer], review [their work], and get a copy [of the return].”
The IRS has taken steps to regularize the tax preparer industry by various means. These include conducting a registration exercise where tax preparers are required to be registered and receive a Preparer Tax Identification Number (PTIN), undergo a continuous education program that involves sitting for a competency test and attending periodic classes. These measures have all be put in place and are to take effect in stages starting this year.
With these new regulations for tax preparers, the first thing you should do in hiring a tax preparer is ask to see his or her PTIN. Upon showing you the PTIN, Jankowski recommends that you still check their references. In other words, the onus is on you, the taxpayer to ensure you make a right choice when picking who to do your taxes for you.
Cases of fraudulent tax preparers are beginning to surface as tax season continues. This year, Jamel R. Williams, a tax preparer from Lawrenceville and another area return preparer, Larry E. Snow of Seward, both submitted dozens of tax returns that included false information and were charged in court for the offence. They both pleaded guilty to the charges and are awaiting sentencing. What’s worse is their clients are deemed responsible for the back taxes.
Here are some ways unscrupulous tax preparers operate:
• They give you a false copy of your Form 1040 that shows a modest return, but at the same time they submit a different version to the IRS that shows a larger refund and pocket the difference.
• They falsely increase deductions or boost business expenses for the purpose of reducing your tax bill.
• They may even invent dependents in an effort to obtain inflated returns and then they take a percentage of it.
Jankowski says that most legitimate tax preparers have a fixed rate to prepare a return. They do not charge based on a percentage of the return. He added, “If you have somebody who says they guarantee a refund without even looking at your stuff, all I can say is they're guaranteeing you trouble.”
Another thing to be wary of is identity theft. Identity theft takes place mostly through phishing scams where scammers send you an email disguised as one from the IRS requesting your personal details such as your Social Security number, bank account or credit card number. Jankowski says the IRS never emails anyone so if you receive a suspicious email supposedly from the IRS, forward it to firstname.lastname@example.org. Do not click on any link or attachment and delete the email after forwarding.