Three Red Flags to Remember When Picking a Tax Preparer

Oleksiy Mark/iStock/Thinkstock(NEW YORK) — When Oscar Lomeli asked his friends for a recommendation on a tax preparer, he didn’t think he’d end up getting stuck paying back his bogus refund.

“They [friends] told me she was good,” said the engineer from Costa Mesa, California. ”She [the preparer] totally lied and now it’s my fault that she wrote the wrong information and now I have to pay the consequences for that.”

With nearly 60 percent of Americans using tax professionals to prepare their returns, the Internal Revenue Service has issued a warning to be on the lookout for con artists making the rounds.

Lomeli said during tax time, the tax preparer came to his house and then left with all of his papers. Two weeks later, he learned he’d receive a $3,000 refund. Lomeli said the woman came to his house to pay him.

“She paid me my refund in $20 bills,” he said.

Lomeli said he later learned that the tax preparer had made up thousands of dollars in deductions. His refund totaled $4,500. Lomeli said she kept $1,500.

“It [the filing] stated that I had a business, which I do not, and it said I lost money in my business, therefore my refund was bigger,” he said.

The IRS said Lomeli’s situation was an all-too-common problem.

“Legitimate preparers should be charging you a fee tied to the amount of work it’s going to take to prepare your return and file it,” said John Koskinen, an IRS commissioner. “That fee should be independent to any refund to which you’re entitled.”

Koskinen shared these three tax preparer red flags:

A preparer who bases fees on the size of the refund.
A preparer who asks you to sign blank or incomplete tax returns.
A preparer who can’t provide a PTIN (preparer tax identification number)

There’s also these additional tips:

The Volunteer Income Tax Assistance Program offers free tax help to people who generally make $53,000 or less, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns.

Make less than $60,000? You can file your federal tax returns for free through IRS Free File. TurboTax is also letting those taxpayers file state returns for free and H&R Block is charging $9.99 through Feb. 15.