It's Tax Season, Are You Filing Safely?

It’s tax season, so it’s time to get your paperwork in order and hire a tax preparer. Unfortunately, though, there are thousands of scammers looking to steal your information and your tax refund by posing as authentic tax preparers. It’s important to learn how to recognize the signs of a fraudulent tax preparer so you don’t fall victim to a tax filing scam. Here’s all you need to know about these scams and how to keep your money and your information safe.

How the scam plays out 

In a tax filing scam, a victim hires an alleged tax preparer to do their taxes. They may be pulled in by the nominal fee the “preparer” is charging, or lured by the scammer’s extensive advertising which makes a frequent appearance on their social media platforms and on websites they often visit. Or, they may be tempted by the large return the “preparer” promises to secure for them.

The victim then shares their information with the supposed tax preparer without suspecting anything is unusual. Unfortunately, though, when the scammer has the taxpayer’s information, they’ll use it to file a tax return in the victim’s name while changing important details, such as a checking account number or mailing address. They’ll swap in their own information and collect the victim’s refund. By the time the victim realizes what’s happened, they’ve lost the money owed to them by the IRS and are at risk of falling prey to identity theft. 

Protect yourself

The best way to stay safe from a tax filing scam is to do your research carefully before hiring a tax preparer. 

First, avoid pop-up ads when choosing a tax preparer, especially those riddled with typos and spelling errors and those that market their services aggressively. Research any preparers you consider hiring by asking for references of previous clients, Googling the name of the preparer and/or their agency and looking for a physical address and phone number on their website. Be suspicious, as well, if they promise a large return without knowing the first detail about your finances.

Second, before hiring an individual or an agency to do your taxes, ask to see their Preparer Tax Identification Number (PTIN). Every legitimate tax preparer must have one of these federally issued identification numbers. If the “preparer” refuses to share their PTIN, you’re being scammed. 

Finally, if you’ve already hired a preparer but you are harboring some doubt about their authenticity, look for these red flags that can prove your suspicions are likely on-target:

• The preparer inflates numbers that directly affect your tax liability, such as charity donations and business-related expenses. 
• The preparer claims ineligible individuals as your dependents. 
• The preparer asks you to sign a blank or partially completed form while promising to fill out the remainder after you sign. 
• The preparer refuses to sign your form.

 If your tax preparer follows any or all of the above practices, terminate your relationship with them immediately.

If you’ve been targeted

If you’ve been targeted by a tax filing scam and you’ve only recognized that you were being scammed after your form has already been filed, report it to the authorities as quickly as possible. Let the FTC know about the scam, alert the IRS and tell your friends and family about the circulating scam, too. 

If you’ve shared your personal information with the scammer, take some additional steps toward protecting yourself from further implications of the scam. For example, if you’ve shared your financial information with the scammer, such as your checking account details, you’re best off closing your account and opening a new one. Also, if the scammer knows your Social Security number, you are now vulnerable to identity theft. Check out the federal government’s page on identity theft recovery to learn what steps to take next. 

Stay alert during tax season and keep your money and your information safe!