In the approaching tax season, if it sounds too good to be true, it probably is.
That’s the message the IRS and U.S. Attorney George L. Beck Jr. want area residents to take with them when they seek out a tax preparer.
In recent years, the country has faced the growing problem of fly-by-night tax preparers who essentially steal money from the government by scamming unsuspecting taxpayers.
“Some tax preparers have been a real problem in the past because they promise the moon to some of these taxpayers and then when the information gets (to the IRS), it turns out to be fraudulent,” Beck said. “The tax preparers are sometimes paying the citizens to falsify information, and some of them are paying their own employees to falsify information.”
A telltale sign of a fraudulent tax preparer, Beck said, is any agency that promises it can get the taxpayer a bigger refund than its competitors.
Many of the tax fraud cases prosecuted in the country and the state have stemmed from those preparers falsifying information to get larger federal refunds and then charging customers a percentage of the refund rather than a flat rate.
“Preparers are not supposed to charge a percentage of a refund as a fee,” said IRS Media Specialist Dan Boone. “An honest preparer will charge a flat fee. It may be (adjusted) based on the complexity of the return. (A percentage) indicates they may be doing some suspicious things to increase your refund.”
Beck said these fraudulent preparers have robbed the government of millions of dollars.
Perhaps worse for taxpayers is that they, not the preparer, are ultimately responsible for the information that ends up on their tax forms.
“I think the most important thing is taxpayers need to remember that whoever prepares their return, the bottom line is they are responsible for making sure that what’s on the return is correct and honest,” Boone said. “That makes it very important to choose a preparer who is honest and who is qualified so that you are sure you’re getting a good product.”
Boone was quick to point out the numerous legitimate and qualified tax preparers who shouldn’t be lumped in with criminals.
“There are a lot of really good preparers out there,” he said. “It’s not difficult at all to find a good and qualified preparer.”
For years, he said, anyone could set up shop and prepare tax returns, but the IRS is fighting for tighter restrictions.
A federal judge, however, ruled against the IRS last week in its bid for tighter controls on tax preparers that would have included, among other measures, competency exams.
Boone encouraged residents to always check their preparer’s credentials to make sure they’re legitimate. He also advised checking with the Better Business Bureau for any complaints lodged against the preparer.
“Check and see how long that person has been in business,” Beck said. “See if they’re promising a higher or quicker refund, then go somewhere else (if they are). If they offer services on a contingency or percentage, chances are they’re not legit.”
As for those who attempt to defraud the government in a tax scheme, Beck said they won’t escape punishment for their actions.
“They don’t get away with it forever, they get away temporarily because of the volume of our tax filing industry and the number of returns filed,” he said. “We have caught and prosecuted them successfully.”
The IRS will not begin accepting tax returns until Jan. 30 due to changes to federal tax laws.