How to Spot a Shady Tax Preparer

With tax time on the horizon, the tax preparers are already ramping up and getting up to speed on the new rules and regulations. While most tax preparers are competent and honest, the tax preparation business also draws its share of shady characters.

It is not always easy for the ordinary taxpayer to tell the good guys from the scam artists, but there are a few red flags shady operators have in common. If you spot any of these warning signs, you may want to look for another tax preparer.

For starters, the shady tax preparer is vague or refuses to answer questions about training and licensing. Tax preparation is a serious business, and quality tax preparers seek out training and continuing education. Tax laws and regulations change frequently and if your tax preparer is not aware, you could end up in some hot waters. Shady operators often forgo that costly training and licensing process.

Then there is the false prophet scenario. The individual preparing your return offers to bump up your refund or guarantees a specific result. Massaging the numbers to get you a bigger return raises your odds of an audit, and you will be on the hook for all extra taxes and penalties. If the tax preparer bases their fee on the size of the refund, that is another red flag! Basing the cost of the preparation on the refund amount is an obvious conflict of interest. The preparer may be tempted to understate your income, overstate your exemptions or commit fraud to boost your refund, ultimately, their fee.

Be wary of any tax preparer who asks you to sign a blank tax return or who does not give you enough time to read the return before signing. Never sign a blank return — you are on the hook for all the information it contains. Read each section of the return carefully before signing. Make sure the income amounts match and that no improper deductions have been taken. In addition, always secure copies of your return upon signing. Keep all these records in a safe place for a minimum of five to seven years.