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Most tax return preparers are honest, reputable individuals who provide excellent service to their clients. However, the IRS has identified many cases of tax return preparer fraud and criminal activity. Dishonest preparers may cause many headaches for unsuspecting taxpayers.
You, the taxpayer, are responsible for all the information on your tax return .
Return Preparer Fraud may involve one or more of the following: a claim of false expenses or deductions, erroneous exemptions and/or credits. When the IRS detects inaccurate information on the tax return, you, the taxpayer must pay the additional taxes AND interest due. You may also be liable for penalties and criminal prosecution.
Fraudulent preparers derive financial gain by skimming a portion of their clients’ tax refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Taxpayers should choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is.
More information on tax preparer scams is available on the IRS website: http://www.irs.gov/businesses/small/article/0,,id=106788,00.html
Be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes or scammers posing as the IRS itself. The IRS does not use e-mail to contact taxpayers about issues related to their accounts. If you have any doubt whether a contact from the IRS is authentic call 1-800-829-1040 to confirm it.
Promoters have been known to make outlandish claims that the Sixteenth Amendment concerning congressional power to establish and collect income taxes was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. Such arguments are false and have been thrown out of court. Taxpayers have the right to contest their tax liabilities in court but no one has the right to disobey the law.
The IRS releases an annual report of notorious tax-related scams. Check the 2006 Dirty Dozen Tax Scams here: http://www.irs.gov/newsroom/article/0,,id=154293,00.html
Remember, you, the taxpayer, are ultimately responsible for the accuracy of information on your return. If you suspect a tax return preparer is engaging in fraudulent activity, or a tax scam, you should report the activity to your nearest IRS office. Information about how to report tax scams is available on the IRS website: http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html You may also communicate this information using Form 3949-A, available on the IRS website, or you may call the IRS at 1.800.829.0433.
Tips on how to select a preparer are available here: http://www.abanet.org/tax/taxtips4u/filing.html