Tax preparation is an unregulated industry, where just about anyone can hang out a shingle and prepare income tax returns. Because it is an unregluated industry, you run the risk of ending up a victim with no recourse or remedial action.
As the Grand Rapids Press investigative reporter found out in the article below, an unscrupulous tax preparer can steal thousands of dollars from you and the local police department can't do a thing about it.
Before you hand over sensitive information, that can lead to identity theft, or plain theft, you should find out if your tax preparer is licensed and reputable. Perhaps paying that larger fee to have your returns done, and done properly, by licensed and trained individuals, you will save in the long run.
Tax prep fraud not a local police issue
'Local police can't access tax records'
Updated: Tuesday, 14 Feb 2012, 7:27 AM EST
Published : Tuesday, 14 Feb 2012, 7:27 AM EST
GRAND RAPIDS, Mich. (WOOD) - A Grand Rapids woman asked a family friend to prepare her taxes. Not only did the friend prepare the taxes, she falsified some numbers to get a $6,000 refund - instead of the legitimate $2,000 - then stole the refund.
"She had it deposited into an account," the woman told Target 8 investigators. "Whose account it was, I'm not sure."
Now the IRS wants the victim to pay back the bogus portion of the refund she never got -- about $4,000.
She reported the scam to the Grand Rapids Police Department, but nothing happened.
"Many times these people call the police because it is a fraud, but it is not a fraud we can assist them with," said GRPD Sgt. Stanley Lis. "Local police can't access your tax records. We take some of the reports but not all of them, because literally there's nothng that we can do but refer them to the IRS."
That's why the GRPD wants people to know the risks to avoid being scammed. Lis said the most frequent complaint they get is about preparers stealing refunds.
But that's not all.
"The problem comes in when the person that does the taxes either steals your identity and commits some kind of fraud afterward," he said.
The IRS warns taxpayers to avoid preparers who base their fee on a percentage of the refund and to consider whether the preparer is likely to be around to answer questions if the IRS finds a problem.
Sgt. Lis said it is extremely hard to protect yourself against preparer fraud.
"You go to an expert because you need their assistance. If you knew the answers you wouldn't need an expert."
