National Consumers League

Consumer Fraud Alert: Tax prep scams expected to rise for remainder of tax season


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March 1, 2017

For release: March 1, 2017

Contact: NCL Communications, Cindy Hoang, cindyh@nclnet.org, (202) 207-2832

phishing_infographic_FINAL_PNG.pngWashington, DC—The nation’s pioneering consumer advocacy organization is  issuing a warning for consumers about the tax preparation scams that are expected to plague taxpayers as they enter the height of tax season. With only seven weeks left to go before the April 18 deadline, more than 70 percent of taxpayers will turn to software or tax preparers to help prepare their returns. 

In 2014, the Treasury Inspector General for Tax Administration identified 2.1 million returns that claimed fraudulent refunds totaling more than $15.7 billion. In 2015 the Department of Justice shut down more than 35 fraudulent tax return preparers.

According to the National Consumers League (NCL), which operates Fraud.org, in a typical scam, an unscrupulous tax preparer may falsify a victim’s earnings, claim credits they did not earn, or even steal a consumer’s entire refund by having it deposited into a different account.

“To add insult to injury, getting caught up in a tax preparer scam will not just cheat you out of your refund and scam you into paying bogus fees,” said NCL’s John Breyault, NCL vice president, public policy, telecommunications and fraud. “It can also expose consumer victims to the liabilities including hefty fines and even imprisonment associated with the criminal offense of filing a fraudulent tax return.”

According to the consumer group, the vast majority of tax preparers are honest, but that doesn’t mean consumers can trust their taxes and personal information to just anyone. Tax experts advise that you give the same attention to selecting your tax preparer as you would to selecting a doctor. Here are some helpful hints to find a great provider you can trust:

  • Take advantage of free and trustworthy tax help. If you make less than $54,000 per year, you probably qualify for free in-person help through Volunteer Income Tax Assistance (VITA) Programs. These programs are staffed with IRS-certified volunteers who will help you file and get the refund you deserve. To find a local VITA click here.

  • File for free with IRS Free File. If you make less than $64,000 per year, you qualify for online help through the IRS’s Free File program. This program allows you to use free, name-brand tax filing software for your federal return. To get started, click here.

  • Ask around. If you don’t qualify for any of the free programs, ask your trusted friends and relatives who they go to for tax preparation and whether they would recommend their services.

NCL also offered red flags for consumers that they may be dealing with a fraudulent tax preparer:

  • The tax preparer fails to make available his or her Preparer Tax Identification Number (PTIN). In order to file taxes professionally, the IRS requires preparers to have a PTIN. You can check to see if your tax preparer has a PTIN and other credentials and qualifications by checking the IRS’s tax preparer directory.

  • The preparer asks the consumer to sign a blank tax return. If your tax preparer asks you to sign a blank tax return, he is probably trying to pull a fast one on you. A signed blank return enables a con artist to later fill in your tax forms with credits you did not earn.

  • The preparer doesn’t require W-2s. An unscrupulous tax preparer may say your last pay stub is sufficient, but that is not the case. A legitimate preparer will always need your W-2s to file a return.

At Fraud.org, NCL offers resources and advice for those who may have fallen victim to other forms of tax fraud. To read the alert and learn more about tax prep scams, click here.

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About the National Consumers League

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.