Avoiding fraudulent tax preparers

Selecting a reputable tax preparer is important 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.

The North Carolina Department of Revenue identifies a number of unscrupulous tax return preparers each year during filing season. Taxpayers who are going to hire a tax preparer should beware of:

• Preparers who claim they can obtain larger refunds than other preparers.
• Preparers who ask you to sign a blank tax return.
• Preparers who charge higher fees or who base their fees on a percentage of a taxpayer’s refund.
• Preparers who are reluctant to provide references.

There are other signs of potential fraud to watch for after selecting a tax preparer:

• Federal and state refunds that are significantly larger than in past years.
• Inflated itemized deductions listed on Schedule A of the federal tax return, including medical expenses, contributions, mortgage interest, and unreimbursed employee expenses such as education, uniforms and tools, and mileage.
• Improper losses from the operation of a business claimed on Schedule C of the federal return.
• Returns filed without the paid preparer’s signature and tax identification number.

The Department of Revenue recommends thoroughly reviewing your completed return with your preparer before you file. If you do not understand information on the return or if you see information that is not correct, you should question the preparer to satisfy your concerns.

If you are not satisfied with the response, or if you believe your return was not properly prepared, contact the Department of Revenue at 1-800-232-4939.