Tax Preparation Scams

Recently we have had a number of calls from taxpayers who have been audited by the IRS after using tax preparation services that charge based upon the size of the refund.   Larger the refund=the larger the fee to that firm. These firms often increase the size of the refund by including phony business expenses or charitable contributions.  The IRS audits one unlucky client either at random or because the return looked questionable, then IRS discovers that virtually all the client’s tax returns have been prepared the same way.  You guessed it, all returns prepared by that firm are audited now instead of good news the client has an unexpected tax debt.  These firms tend to pop up at this time of year and the “good news” about the size of refund is spread by word of mouth inside families, the work place, or even churches.   The tax return is prepared by an individual who typical vague about how they prepare the return for the client and use the emotion about the “tax refund” as tool to get clients to not question their practices.   Be careful.