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Income Tax Fraud and How to Avoid It

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Contents

Income tax fraud is a huge problem

Choosing a good tax preparer is important

No one likes paying income taxes, but doing so is an unpleasant, but necessary part of living in a country that provides basic services. Here we will tell you how to choose a good tax preparer and how to avoid being taken by a dishonest one.

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tax fraud can hurt

Income tax fraud can easily be avoided

The time of year is one that most Americans dread, as it becomes necessary to begin preparations for fling the Federal income tax return that is due on or about April 15 of every year. The tax code now runs the better part of 10,000 pages, so it is beyond the scope of most Americans to figure out how much they owe. Many people simply have their taxes professionally prepared by someone who ostensibly understand how the system works, and most assume that the return submitted will be accurate and that, with some luck, there will be a refund involved.

But there are some unscrupulous types out there who will try to take advantage of the situation and of the taxpayers themselves, by filing dishonest returns on behalf of their clients. They may do so in order to provide a greater refund for the client or they may do so to generate a greater fee for themselves, or both. No matter what the reason, filing a fraudulent tax return is a crime, and the only one who will pay the penalty for filing one is the taxpayer.

Keeping that in mind, here are some tips for how you can wisely select a tax preparer.

  • A taxpayer who says that he or she can provide you with a larger income tax refund than others who might do the job deserves some scrutiny. You earn so much money and you are entitled to certain deductions. Other than that, how are they going to generate this larger refund? Probably by doing something dishonest, such as reporting nonexistent deductions or by misrepresenting income. There are a number of financial scams that involve taxes; you want to avoid them.
  • A tax preparer should have a set fee, not one based upon the amount of the refund you have coming. You do not want to provide a preparer with incentive to falsify information.
  • Any honest preparer will sign your tax return and provide you with copies of all documentation.
  • Should you be audited, you will want your preparer to be available to answer questions you or the IRS might have. Will he or she still be around?
  • An honest preparer will never ask you to sign a blank form. Don’t do it.
  • An honest preparer will be upfront about the qualifications he or she brings to the job. Are they affiliated with any professional organizations? Are they a CPA? 
  • As with hiring any professional, ask around for the opinions of friends, family members or coworkers. Don’t just grab a name out of the phone book.

The fines for filing a fraudulent tax return are substantial and include tens of thousands of dollars in fines as well as time in a Federal prison. Unless you have some interest in the above, you will probably want to submit an honest return that has been prepared by an honest professional. If you are not sure about the person who has offered to do your taxes, find someone else.

 

 

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