Tax Fraud Alert for Individuals
Each year, some North Carolina taxpayers are assessed additional tax, penalties, and interest as a result of deliberate actions by fraudulent preparers. These deliberate actions are intended to fraudulently increase individual income tax refunds that the taxpayers, not the preparers, are responsible for when the Department of Revenue corrects their tax return(s) to reflect the proper tax and/or refund due.
The Department has assessed taxpayers more than $134 million in additional taxes over the last three years as a result of fraudulently prepared tax returns with inflated refund requests. While the overwhelming majority of paid tax return preparers provide outstanding service to their clients, some inflict financial harm due to deliberate fraudulent actions.
Please remember a paid tax preparer should always sign the return. However, even though the preparer signs the return, the taxpayer is ultimately responsible for all information represented on the tax return. Always review your completed return with your tax professional. If you do not understand the information on your return, or if you see information that is incorrect, question your preparer to satisfy your concerns. If you are not satisfied with the response, notify the Department of Revenue.
- Be wary of tax return preparers who claim they can obtain larger refunds than others can.
- Avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of your refund into their financial accounts.
- Use a reputable tax professional who enters his or her PTIN on the tax return, signs the tax return, and provides you a copy of the return
- Consider whether the individual or firm will be around for months or years after filing the return to answer questions about the preparation of the tax return.
- Never sign a blank tax form.
- Fraudulent charitable contributions reflected on your tax return
- Fraudulent business reflected on a schedule C reflecting fraudulent expenses and losses
- Fraudulent W-2 Forms that reflect wages and withholding that you did not earn
- Erroneous claims of expenses reported on form 2106 that you are not entitled to claim unless you are a reservist and other criteria
- Preparer requests to be paid in cash
- Preparer does not ask you questions about your income and expenses
- A starting point for choosing a preparer - https://www.irs.gov/tax-professionals/choosing-a-tax-professional
- The detailed list for best tips in choosing a preparer - https://www.irs.gov/newsroom/tips-to-help-people-choose-a-reputable-tax-preparer
- Information on “ghost” preparers (preparers who do not sign the return) - https://www.irs.gov/newsroom/beware-of-ghost-preparers-who-dont-sign-tax-returns
- US Dept. of Justice efforts to stop fraud - https://www.justice.gov/opa/pr/justice-department-continues-efforts-stop-fraudulent-taxpreparers
Please report any fraudulent tax preparers to the North Carolina Department of Revenue: https://www.ncdor.gov/contact-us/report-tax-fraud.