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Taxpayers: Beware of fraudulent preparers

Posted April 7, 2009

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— The North Carolina Department of Revenue is worried about fraudulent tax preparers and is putting out the word that taxpayers could be left paying a higher tax bill.

Over the past few years, state taxpayers have been billed millions of dollars because of errors, including inflated personal or business expenses, false deductions and excessive credits and exemptions. In the past three years, the department found more than 6,000 taxpayers who filed returns with fraudulent tax preparers. Those taxpayers now owe nearly $15 million.

Protect yourself from tax fraud Taxpayers could be responsible for fraud

With the weakened economic environment, the department says it is even more concerned about fraud.

"People in that kind of environment are more willing to take risk," said Tom Dixon, director of the department's Criminal Investigations Division.

A reputable tax preparer is important, the department says, because taxpayers are responsible for the information contained on their returns. If the state identifies a fraudulent tax return, the taxpayer – not the preparer – is responsible for all tax, penalties and interest due.

"There's plenty of people out there," said Ben Micham, a certified public accountant in Raleigh. "Some of them get caught. A majority of them don't."

Micham recommends taxpayers screen preparers and ask about qualifications, experience and references. He also says to beware of higher refund promises and fees based on a percentage of those returns.

"It's to their advantage to bump that refund up as high as possible," Dixon said.

There are other signs of potential fraud to watch for after selecting a tax preparer, the department says. That includes federal and state refunds that are significantly larger than they were in past years. (View more tips.)

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