The last couple of years have brought a lot of tax changes thanks to the Tax Cuts and Jobs Act (TCJA). The TCJA, signed in to law at the end of 2017, prompted a lot of people to seek the help of a professional in preparing their taxes for the first time. When life changes mean tax changes, it can also be reassuring to have professional help beyond a tax preparation software program.
There are many reputable tax preparation companies out there -- and many more legitimate local accountants and tax preparers to choose from. However, there are also people out there who lure taxpayers with low costs and promises of substantial refunds. The Internal Revenue Service (IRS) warns taxpayers that they can be just a front for identity theft, refund fraud and other scams that can cost people dearly.
The IRS offers some tips to help people avoid becoming the victim of fraud or just be left taking responsibility for unnecessary errors and omissions. For example:
- Be sure any preparer you choose is properly credentialed. They should have a Preparer Tax Identification Number (PTIN) from the IRS. The IRS website has a directory of registered tax preparers that's searchable by zip code. They should also have professional credentials like being a certified public accountant (CPA), enrolled agent or lawyer.
- Avoid preparers who base their fee on the client's refund or promise larger refunds. While we'd all like a refund, it's more important that your taxes are done properly.
- Don't give someone tax documents or other personal information like your Social Security number until and unless they prepare your return. This information can be used to fraudulently file a return without your knowledge.
- Don't choose a preparer who doesn't offer IRS e-file. Anyone with at least 10 clients typically needs to use it, and it's the safest method for filing taxes.
- Always review your completed return before signing it. With e-file, you'll sign electronically. Never sign a form that's blank or incomplete. Always get a copy of the completed forms and all supporting documents.
The IRS and the Department of Justice (DOJ) go after people who defraud taxpayers and/or the IRS. However, if you believe that a preparer is not legitimate or if you've already been defrauded by an unscrupulous preparer, it's wise to seek legal guidance.