Tax Return Preparer Fraud

Tax form with tax preparer signature, and reminder to have your tax preparer sign your tax forms Even if you hire a tax return preparer who you believe is professional and honest, tax return preparer fraud (also referred to as return preparer fraud and preparer fraud) or misconduct is something that can happen to anyone. For example:  A tax return preparer (also referred to as return preparer) might change your tax return after you’ve approved and signed it, altering income or credits to obtain a bigger refund and then keeping some or all of it.

In some cases, the return return preparer might steal your whole refund by changing direct deposit information. Another common fraud situation is when the preparer files a tax return without your authorization.  They might have your information from a prior year and use it to file a return for the current year. Or perhaps you met with a return preparer and then chose not to hire them, but they  filed a return using your information anyway.

To avoid problems:

  • Be careful when choosing a tax return preparer;
  • Know what steps to take to protect yourself; and
  • Know what to do if you’re the victim of return preparer fraud or misconduct.

Be careful when selecting a tax return preparer

This means finding someone with an established business and a good reputation, and knowing certain warning signs

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 IRS Form 8879, IRS e-file Signature Authorizationauthorizing the 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 of your information and you’ve confirmed it is 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 is not authorized to have your refund deposited into a bank account under his or her control.

As explained on IRS 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, such as your tax return preparer's bank account.  Although you may owe your return preparer a fee for preparing and filing your tax return, don't have any part of your refund deposited into the return preparer's bank account to pay the fee.

Always get a complete copy of your return 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. 

If you are a victim of return preparer fraud or misconduct

The first indication you’ve been victimized by an unscrupulous preparer might be correspondence from the IRS. For example: An IRS notice may alert you to a mistake on your tax return or that it’s being audited. 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 IRS 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:
  • IRS Form 14157, Complaint: Tax Return Preparer
  • A copy of the return provided to you by the preparer.
  • A signed copy of the return as you intended it to be filed.
  • Proof of the refund amount (if applicable).
    • If your refund was direct deposited, a copy of your bank statement showing the deposit amount.
    • If your refund was mailed, a copy of the paper refund check.
  • Copies of documents you received from the return preparer.
  • Additional information about the 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.

IRS Form 14157A has a long list of requested documents. If you don’t have all of them available, file your complaint with the information you do have. In some cases, the IRS will consider the claim even without one or two requested documents.

Make sure you keep copies of everything for your records.

If you are the victim of return preparer fraud or misconduct, you will need to demonstrate it to the IRS. If the IRS rejects your claim, you may face additional issues, including liability arising from the fraud or misconduct.

If you cannot prove the dishonest preparer changed your return after you signed it, the IRS will assume the altered return the preparer filed is correct, and will hold you accountable. This means you will be responsible for paying back any incorrect refunds the IRS issued, regardless of whether the money went to you or the dishonest preparer.

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 tax 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 the position, you should contact the Taxpayer Advocate Service and ask for help.

Have a different tax issue?  Browse common issues and situations at Get Help.

Is your tax problem more complex?  If your issue is causing you financial hardship, you have tried repeatedly and are not receiving a response from the IRS, or you feel your taxpayer rights are being violated, consider contacting Taxpayer Advocate Service (TAS).

Do you feel that you need help from a tax professional but can’t afford one? You may be eligible for representation from an attorney, certified public accountant (CPA), or enrolled agent associated with a Low Income Taxpayer Clinic.

Last modified May 7, 2017