Beware of Unscrupulous Preparers Who Target Taxpayers Eager to Get a Large Refund

February 26, 2014
Washington Post 
Tax season is one of the most common times for financial fraud. Filers' eagerness to get a refund and the complexity of the tax code together provide ample opportunity for scammers. “Scams can be sophisticated and take many different forms,” said Internal Revenue Service Commissioner John Koskinen. “We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”

The IRS’ list of fraudulent practices include identity theft, which can allow thieves to use stolen Social Security numbers to claim refunds through fake returns. The list also includes telephone scams in which people pretend to be IRS employees, email phishing scams, and schemes that promise a big refund.

Preparer fraud is also on the list this year. An unscrupulous preparer may claim inflated personal or business expenses, claim false deductions, advise clients to take unallowable credits, or manipulate income figures. A preparer may get a taxpayer to give him or her a percentage of a refund, or alter a return to boost refunds that are then directed into their own bank accounts. In one case, a Michigan tax preparer filed a form to have the IRS split refunds and make direct deposits into his and the taxpayer's bank accounts. The preparer filed returns claiming false W-2 withholdings, itemized deductions, first-time home buyer and residential energy credits, business income, and unreimbursed business expenses. The preparer was sentenced to 30 months in prison and $462,798 in restitution.

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