Beware of Tax Refund Scams

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The first sign your tax preparer is a fraud usually starts with
taking a piece of your tax refund

SACRAMENTO, Calif.–(BUSINESS WIRE)–Did you know tax preparers are not allowed to take a percentage of your
tax refund as compensation? Nor can they base their fee on the amount of
your tax refund. And you should never trust advertisements that
“guarantee” tax refunds before reviewing your paperwork.

“How can anyone know if you’re entitled to a tax refund until they’ve
looked at your paperwork? It’s simple. They can’t,” said Margy Dunn,
chair of the California Tax Education Council (CTEC), a state-mandated
nonprofit organization that manages the registration of more than 40,000
unlicensed tax preparers.

“The key to staying out of trouble with the IRS and getting the
so-called ‘biggest refund’ is all about how much the tax preparer knows
about tax laws,” said Dunn.

It is one of the reasons why California requires tax preparers to be
licensed or registered. Anyone who prepares tax returns for a fee must
be either an attorney,
certified
public accountant (CPA)
, CTEC-registered
tax preparer (CRTP)
or enrolled
agent (EA)
. Each professional must pass an initial test and follow
educational requirements.

Yet, despite state requirements, there are still thousands of
“underground” or “ghost” tax preparers who are stealing tax refunds from
unsuspecting taxpayers.

“Ghost tax preparers the hardest to track down because they don’t sign
client tax returns. They just take the money and vanish,” said John
Bishop, CTEC board member.

So what should you look out for?

  • The tax refund should always be deposited or mailed directly to you.
    Never to the tax preparer.
  • The fee should be based on the complexity of your tax return, not the
    amount of your tax refund.
  • Never trust a tax preparer who promises “bigger” tax refunds than
    competitors or guarantees a tax refund before reviewing your
    information.

“If the tax preparer somehow wants a piece of your refund? Walk away,”
said Bishop.

To get more tips and advice, visit KnowYourTaxPreparer.org.

CTEC is a nonprofit organization that was established in 1997 by the
California State Legislature to protect taxpayers against fraud and
incompetent tax preparers. Taxpayers can report unlicensed or
unregistered tax preparers at ctec.org.

Contacts

California Tax Education Council
Gigi Jones, 916-296-6913 (cell)
PR
Director
gjones@ctec.org