Your Tax Preparer May Need A Refresher Course...
Jan 6, 2015
It never seizes to amaze us how rules get bent when it comes to taxes. Relax, this one's not about how some taxpayers cheat the IRS, this one's about how tax return preparers and e-file providers cheat the IRS.
At all seminars we attend, there are always lectures regarding taxpayer fraud, but within the past 3 years or so, more emphasis is being placed on tax preparer fraud. IRS logic is simple: while one crooked taxpayer may get away with $1,000 worth of fraud, one crooked tax preparer could get away with $1000 multiplied by however number of customers he has.
That adds up very quickly and IRS wants to nip it in the bud. Not to bore you with details, but IRS has penalties ranging from $25 to hundreds of thousands of dollars.
One prevalent example is when the preparer splits a fraudulent refund with the taxpayer. They simply prepare a bogus return, maximize the refund, and split the refund. In a greedier variation, the taxpayer is unaware they're dealing with a cheating preparer and they're told that they'll receive a refund for a certain amount. After the taxpayer leaves, the bad preparer then goes back and changes the return so that the refund is even more than what was told to the customer and the crooked preparer keeps the excess for himself.
Two signs of tax preparers possibly doing improper things are that they won't give you a copy of the return and if they do, they will not sign as the preparer and instead will sign it "self-prepared".
Tax preparers not following the rules are asking for major financial and legal trouble.
To that end, a little birdie told me she was told that a certain "fast" chain is telling people that it's okay to file taxes just by bringing your last pay stub as long as it doesn't show insurance on the stub. Not only is this untrue, but it could also lead to incorrect reporting and worse--it goes against IRS rules.
In order to file your tax return electronically, the provider (your tax preparer) is required to have your W-2 form in hand--not a pay stub. The only exception to the rule is when you haven't received your W-2 by mid February and the employer isn't giving it to you (you'd then call IRS to report them and use form 4852 for your W-2). Not having the W-2 on file in the case of a surprise IRS visit can lead to hefty fines.
Anyway, if your tax preparer is telling you it's okay to file using your final pay stub, you may want to forward this link to them (and maybe look for a new one!):
As a crazy aside, I just got a call from a printer supply rep who told me that he was told the same thing out in California (I didn't ask him what chain had told him that).
A bad preparer is like a cheating spouse: if they're willing to cheat the IRS, what makes you think they won't cheat you?
Call us for all your tax needs. We're licensed, open year-round, fairly-priced, and overall nice people!
See you soon.