Telling Ways to Know if Your Tax Preparer is Legit

When tax time rolls around, it's easy to get dollar signs in your eyes while dreaming of your refund, and when tax advisers start advertising that they can help you get a larger refund than you would get on your own, it can be almost impossible to resist. The fact of the matter is, though, that like most other things, if it sounds too good to be true, it probably is. The tax preparation industry is awash with individuals hoping to prey upon the naïveté or desperation of their clients to make big bucks for themselves. If you fall victim to one of these shady tax preparers, the one left holding the bag is going to be you.

So, how you do you avoid falling for a tax preparer scam? There are a number of little things disingenuous tax preparers do that should set off alarm bells in your head and send you running for the door. Know the signs, and save yourself a lot of trouble in the long run.

The first thing that should worry you is big promises of huge refunds or guarantees that one tax preparer can get you a bigger refund that anyone else. The truth is that your refund is what it is. Some tax preparers can help you find legitimate deductions that you wouldn't have known about on your own, but if one preparer is coming up with tons of deductions no other tax experts are seeing, something is wrong. There are only so many legal deductions you can take, and they are not a secret. Chances are that if you take your taxes to ten legitimate preparers, they will come up with nearly identical returns for you. The one that comes up with something different is the one you have to worry about.

Another thing that says "red flag" is a tax preparer who wants a percentage of your refund. Working on commission is illegal for tax advisors, and if they offer to do it, you can expect that they are going to be illegally bumping up your refund. If the preparer even offers commission as a payment option, get out of there.

You should also watch out for tax preparers who want you to sign your tax return without walking you through all of the paperwork. You should never sign a blank return and then let you preparer handle it from there. Carefully check everything yourself; a legit preparer will insist you do so. Also, your tax preparer should be willing to co-sign your return with you. If the preparer doesn't want their name on your return, don't trust them.

Tax preparation fraud is big business. One recent case involved a California tax preparer who had managed defraud the IRS out of $75 million by creating bogus businesses in his client's names, and then claiming business losses on their behalf. He was sentenced to prison for 11 years, but his clients will still have to pay the IRS overdue taxes, plus penalties and late fee. If you use a bogus tax preparer, you might not be the one to go to jail, but you will be the one left paying the bill. Ultimately, the law says it is your responsibility to make sure you use a tax provider who is legitimate.

If you need to find a tax preparer, ask around and find out if friends and family can recommend a good, legitimate preparer. If not, don't be afraid to ask a lot of questions and refuse to do business with any preparer who makes you uncomfortable. Your financial well being may depend on it.

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