Tax Return Preparer Fraud

Be careful when selecting a tax return preparer

The IRS has a directory of preparers with certain kinds of credentials, such as enrolled agents. IRS.gov also offers a list of national non-profit tax professional groups, which can help provide additional information for finding the right type of qualified help. You may have a reference from someone you know or have a tax return preparation business in your neighborhood.

How to protect yourself

Don’t authorize the return preparer to file your tax return until you’ve reviewed it and made sure all your information is correct. This means deductions, credits, personal details, and any direct deposit information. You can authorize a tax return by signing the actual tax return or Form 8879, IRS e-file Signature Authorization, authorizing the tax return preparer to use your Personal Identification Number (PIN) to submit your tax return electronically.

Never sign a blank tax form. You should only sign the tax return after the return preparer enters all your information and you’ve confirmed it’s correct.

Never have your refund or any portion of your refund direct deposited into an account under the return preparer’s control. Although you can split your refund among up to three different bank accounts, a return preparer isn’t authorized to have your refund deposited into an account under his or her control, even if you owe the preparer a fee for preparing your tax return.

As explained on Form 8888, Allocation of Refund (Including Savings Bond Purchases), the bank account must be in your name. Don’t request a deposit of your refund to an account that isn’t in your name.

Always get a complete copy of your return and keep it for your records. You must verify your tax return includes the return preparer’s name, signature, and Preparer Tax Identification Number (PTIN). Paid return preparers must have a PTIN issued by the IRS. They must enter that number, along with their name and signature, on every tax return they prepare in exchange for payment and must give you a copy of the tax return.

Get your tax record and monitor for any activity on your account.

The first indication you’ve been victimized by a dishonest return preparer might be correspondence from the IRS. For example: An IRS notice alerting you to a mistake on your return or notification of an audit. Another way you might find out is if a transcript of your account doesn’t match the tax return you signed.

No matter how you find out you’re the victim of return preparer fraud or misconduct, you need to take the following steps:

1. Contact your local police department and file a report naming the return preparer as a suspect.
2. Fill out Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit. This form will outline the other documents you need to submit to the IRS, which include:

• • Form 14157, Complaint: Tax Return Preparer.
  • A copy of the tax return provided to you by the return preparer.
  • A signed copy of the tax return as you intended it to be filed.
  • Proof of the refund amount (if applicable).
    • If your refund was direct deposited, provide a copy of your bank statement showing the deposit amount.
    • If your refund was mailed, provide a copy of the paper refund check.
  • Copies of documents you received from the tax return preparer.
  • Additional information about the tax return preparer, such as a copy of a business card, promotional flyer, or local business listing.
  • Copies of documents to support your claim, such as:
    • A signed and dated statement providing an in-depth explanation of the misconduct.
    • A copy of the police report.

Make sure you keep copies of everything for your records.

If you’re the victim of return preparer fraud or misconduct, you’ll need to show it to the IRS. If the IRS rejects your claim, you may face additional issues, including penalties, interest and any additional tax liability arising from the fraud or misconduct.

It’s important to get a copy of the tax return at the time you authorize the return preparer to file it on your behalf (see above on how to authorize) because later you may have to show the IRS that the return preparer altered your tax return after you signed it.

Following the steps in the “What Should I Do?” section will help you establish your case, especially providing the IRS with the signed copy of the tax return your preparer gave you, showing your correct bank account number and address.

If you’ve given the IRS the signed copy of the original tax return, the Taxpayer Advocate Service believes the IRS has sufficient guidance to take corrective actions, including issuing any refund still due to you. If the IRS doesn’t agree with this position, you should contact the Taxpayer Advocate Service and ask for help.

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.