With the proliferation of tax preparation storefronts that are here today and gone tomorrow, the prevalence of tax return scams or unscrupulous tax filing practices is on the rise. While the government is attempting to buckle down on tax scammers, it’s incumbent upon you to sort out the bad apples from the reputable tax professionals. To help you spot the phonies, take note of these warning signs:
The tax preparer won’t sign your return.
There’s a designated area on your tax return for your preparer to sign. No matter what, you will be responsible to pay fees and penalties if there are mistakes, so there’s no reason a tax prepare should refuse to sign the return. By doing so, they put their stamp of approval on it. By refusing to do so, it’s clear that they have something to hide.
The tax preparer promises you a specific amount on your return.
If someone says they can guarantee you X amount of dollars on your return, they are blowing smoke. No one can know for sure how much you will receive until they’ve done all of your paperwork.
The tax professional bases the fee on the amount of your refund.
This is also suspect, since it may motivate the tax preparer to artificially inflate your return amount. Tax professionals should charge according to the complexity of your return, not on how much you receive from the IRS.
The tax accounting firm doesn’t have a history.
The IRS may initiate an audit up to 7 years after you file your return. If that happens, you’re going to want to talk to your tax preparer – make sure they’ll still be in business if you have questions. Watch out for accounting firms that set up temporary store fronts or just suddenly appeared right around tax time. One last bit of advice: You may be better off choosing a CPA. Aside from being the best fit for complex tax situations, you can easily verify a CPA’s license online. For example, you can check the status of a Bellevue or Seattle CPA’s license at the Washington State Board of Accountancy website with just a few clicks. It’s illegal to call yourself a CPA if you aren’t one, and if they don’t show up in your state’s database, that’s a deal breaker.