Beware of Tax Scams and Fraudulent Tax Preparers
“If it sounds too good to be true, it probably is.” We’ve all heard that expression when it comes to getting a great deal on something. That phrase also rings true when it comes to tax preparers. And unfortunately, tax season brings out the fraudulent tax professionals who will do what they can to entice tax payers just to steal their money.
Recently, a federal grand jury in Maine returned an indictment on paid return preparer Thierry Musese. For tax years 2021 through 2022, Musese prepared returns for clients that contained false information resulting in the clients claiming refunds to which they were not entitled. In tax year 2023, Musese allegedly continued to prepare false tax returns for clients even after his electronic filing identification number was revoked by the IRS. He did all these things while running a tax preparation business out of a barbershop he owned and operated.
Unfortunately these stories are all too common and people are taken advantage of daily. Spotting a fraudulent tax preparer is crucial to avoiding scams, identity theft and IRS penalties. Here are key red flag warnings to spot a fraudulent tax preparer.
Promises of huge returns — Be wary if they guarantee large refunds without reviewing your financials.
Refuses to sign as preparer — Legitimate tax preparers must sign your return and include their Preparer Tax Identification Number (PTIN). If they refuse, don’t trust them!
Asks you to sign a blank tax return — This is a huge NO! Never sign a blank or incomplete tax return as this allows fraudsters to enter false information.
Charges fees based on your refund amount — Legitimate tax preparers charge fixed fees. They should never be based on the size of your refund.
Encourages false deductions or credits — Fraudulent preparers might inflate deductions or claim ineligible credits to increase your refund. This can also be a big red flag to the IRS and start an audit.
Avoids e-filing — The IRS requires tax preparers who file 11 or more returns to e-file. So if your preparer insists on paper filing, they may not be legitimate.
Lacks credentials — Always check your tax preparer’s credentials! A qualified preparer should be an Enrolled Agent (EA), CPA or an attorney. They also must be registered with the IRS.
It’s so easy to be tempted by the promise of not owing taxes and money. Do not let that blind you when it comes to tax preparers. Know the red flags and warning signs. If you’re not sure if someone is legitimate, seek advice from an experienced San Francisco tax attorney or professional. And remember: if it sounds too good to be true, it probably is!
Allison Soares is a partner and tax attorney at Vanst Law LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego.
