Tax season is here, so it is important to stay aware of fraudulent tax preparation practices that can place you at serious financial and legal risk. Refund manipulation scams often involve dishonest preparers filing inaccurate returns to generate inflated refunds and directing those refunds into their own bank accounts.

How the Scam Works

These scams work in a variety of ways. Dishonest preparers can falsify income or withholding amounts to artificially inflate tax refunds. They can claim ineligible credits or deductions, or even list their own bank information to steal a taxpayer’s refund. Taxpayers often don’t find out about these scams until it’s too late, and by that time they’re unable to contact the fraudulent preparer.

The Serious Consequences

Even if a preparer completes your return, you are legally responsible for everything filed under your name and Social Security number. If the IRS determines the return is inaccurate or fraudulent, you may be required to repay the refund with interest and penalties. You could also face audits or additional enforcement action.

Red Flags to Watch For

Dishonest preparers are good at concealing their scams, but there are some red flags that you should look for when choosing a tax preparer. Fraudulent preparers may promise large tax refunds that are guaranteed, they may charge a fee based on a percentage of your tax refund, or they may direct your refund into an account that isn’t yours. They may refuse to let you review your tax return before filing it or request that you sign a blank tax return. The preparer may also not list a Preparer Identification Number also known as an IPIN.

How to Protect Yourself

There are many ways to protect yourself from tax preparer scams. It’s important to research your preparer’s online presence, reviews, and years in business. You should always work with reputable, credentialed tax professionals. Verify their Better Business Bureau ratings and complaint history. Make sure you review your tax return before signing it. Confirm you bank account information for direct deposit. Keep copies of your filed return and supporting documentation. Avoid preparers who cannot demonstrate longevity or a legitimate professional footprint.

Your Responsibility as a Taxpayer

Your signature confirms that the information on your return is accurate to the best of your knowledge. You are responsible for providing complete and truthful information, reviewing the return carefully, and ensuring all income, deductions, and refund details are correct before filing.

If You Suspect Fraud

If you believe a return was filed improperly, contact the IRS promptly, consider filing Form 14157 (Complaint: Tax Return Preparer), and consult with a qualified tax professional to review prior filings and determine next steps.

Staying informed and working with established, reputable professionals is the best way to protect yourself from refund scams and long-term financial consequences. If you believe you may have been impacted by this scam, please contact us today. Our team will review your previously filed return at no cost to ensure everything is accurate and help you determine the next steps.