John C. lived in Texas and worked as a tax preparer. He operated a company that conducted virtual tax preparation with locations in Florida and Texas.
But he was also a criminal.
You see, John came up with a scheme to falsely create and submit tax returns on behalf of unsuspecting taxpayers.
Taxpayers would contact John about his tax services, and he would tell them he could get them larger refunds compared to other tax preparers.
John would tell the taxpayer that he would split the additional tax refund with the taxpayer.
But to receive the larger refunds John would generate false deductions without the taxpayer knowing.
Eventually, undercover IRS agents posed as taxpayers and contacted John about his services.
John said he would estimate the tax refund the agent would receive from a standard tax preparer, then give him an amount that he would receive with John’s services.
He told the undercover agent that he would make decisions regarding tax deductions.
When John completed the agent’s tax return, he claimed almost $30,000 in fraudulent deductions.
This resulted in a refund of $6,000, and John told the agent that he would have received only $300 if he used another tax company.
John conducted the scheme with dozens of taxpayers and received hundreds of thousands of fraudulently paid returns.
He was charged with 33 counts of filing fraudulent tax returns.
“Today’s indictment sends a clear message, you will be held accountable if you abuse our tax system for your financial gain,” said an IRS agent.
More than 50% of taxpayers use a tax preparer to assist them, and as you prepare your taxes this year it’s important to be careful who you trust to do your taxes.
Considering this, here are a few things to keep in mind when choosing a tax preparer.
Online preparers:
These days we can do almost everything online.
These days any legit tax preparer should be able to do everything electronically including sending your tax return to the IRS.
This is why some taxpayers might use an online preparer and don’t need to go to a physical office.
Ask the tax preparer for their preparer tax identification number (PTIN) and ensure that it’s valid with the IRS.
A legitimate tax preparer will have a valid number and include their PTIN on every tax return they complete.
Secure access:
As I said, you can do everything online with your tax preparer.
But a good tax preparer won’t just have you email them all your documents.
A quality tax preparer will have a portal or link for you to send your tax documents securely.
This could be through a secure cloud storage or a link that the tax preparer provides for you.
If a tax preparer asks you to email all your documents to their Gmail this could be a red flag.
File ASAP:
The IRS estimates that more than 140 million Americans will file their taxes before the April 15th deadline.
The reason so many people do this is because they want their tax refund.
But it’s also good to file your taxes as soon as possible to reduce the risk of tax-related identity theft.
Scammers often try to file tax returns using another person’s social security number.
However, the IRS only accepts one electronically filed tax return per social security number.
So, the earlier you file, the less chance that a scammer will successfully use your identity to file since you beat them to it.
Ignore emails or texts:
If you have ever dealt with the IRS, you know they like to send notices through the mail.
They want a paper trail which is why they send official documents to taxpayers.
The IRS doesn’t initiate contact through email, and they won’t send you text messages without your permission.
Also, they typically send a letter in the mail before communicating with you any other way.
