Warning signs of crooked tax preparers
Warning signs of crooked tax preparers
ERIN E. ARVEDLUND, INQUIRER STAFF WRITER
POSTED: Sunday, January 11, 2015, 3:01 AM
With the onset of the 2015 tax-filing season, here are cautionary tales of a man and a woman whom you don’t want preparing your taxes.
The Department of Justice and the Internal Revenue Service highlight some of the brightest red flags among fraudulent tax preparers.
These two local folks were doozies.
In 2013, “Archie” – full name, Adekunle Adetayo Adeolu – was sentenced to prison and $135,519 in restitution after filing false tax returns. He operated Adeolu & Okojie, a tax-service business in Philadelphia.
Red flag: When a client owed federal taxes, Adeolu would sell that person a name and Social Security number in order to claim a stranger as a dependent, then falsely claim an income tax credit or a child tax credit.
In August 2014, Dawn Chamberlain, of Claymont, Del., was sentenced to 51 months in prison and ordered to pay restitution of $833,160. Between 2009 and 2012, Chamberlain filed more than 450 false individual federal income tax returns for others, claiming more than $730,000 in credits, to which her clients were not entitled.
Red flag: Chamberlain deposited client refunds into her own bank accounts. She returned less than the full amount of the refunds to her clients, and also used client names, dates of birth, and Social Security numbers to file fraudulent New York State Resident income tax returns, requesting refunds of more than $210,000.
How can we avoid these nasties?
Dishonest tax preparers employ a bag of tricks, including inflated or phony expenses; charitable contributions; medical and dental expenses, and false dependents.
Many people accused of tax evasion just make mistakes. These were criminals.
If you can afford one, there are different types of return preparers. Visit the IRS website to learn more (IRS.gov/chooseataxpro).
Avoid tax return preparers who claim or advertise that they obtain larger refunds than other preparers.
Avoid preparers who base their fee on a percentage of the amount of your refund. Check fees upfront.
A reputable tax professional signs and enters a preparer tax identification number (PTIN) on your return and provides you with a copy for your records.
Anyone with a valid 2015 PTIN is authorized to prepare federal tax returns.
Tax return preparers, however, have differing levels of skills, education and expertise.
Consider whether his or her firm will be around to answer questions about your tax return, months, even years, after filing.
Never sign a blank tax return.
Ask for referrals. Do you know anyone who has used this tax professional? Were they satisfied with the service they received?
Does your tax preparer have a professional credential (enrolled agent, certified public accountant, or attorney), belong to a professional organization, or attend continuing education classes? For instance, tax law changes, such as the Affordable Care Act provisions, will be maddening.
Always make sure your refund is sent to you directly or deposited into your bank account. Your tax preparer should not deposit your refund into his or her bank account.
Make sure your preparer offers IRS e-filing (electronic filing). Ask that your return be submitted to the IRS electronically. Any tax professional who gets paid to prepare and file more than 10 returns generally must file electronically.
Records and receipts: Good preparers will ask to see these. They will ask questions to determine your income, deductions, tax credits and life events. Did you get married? Did a close family member pass away or did you experience financial difficulty last year?
Don’t rely on a preparer who is willing to file your return just using your last pay stub.
Paid preparers must sign returns and include their PTIN, as required by law. The preparer must also give you a copy of the return.
File for free
Not everyone can afford to pay for tax prep. Readers asked us to reprise free (yes, free) tax filing resources.
The Free File Alliance (www.IRS.gov/freefile) is a nonprofit coalition of tax software companies partnered with the IRS to help millions of Americans prepare and e-file their federal tax returns for free – if you have 2014 adjusted gross income of $60,000 or less.
Although not available until Jan. 16, Free File Alliance member companies provide more than a dozen brand-name tax software options at no cost. The IRS begins accepting tax returns electronically on Jan. 20. Paper tax returns begin processing at the same time.
Also TaxACT.com offers free federal filing, including all e-fileable IRS forms.
Investing in You: IRA TAX PROS
National organizations that can help you find a tax professional:
American Institute of Certified Public Accountants (AICPA)
American Association of Attorney-Certified Public Accountants (AAA-CPA)
National Association of Enrolled Agents (NAEA)
National Association of Tax Professionals (NATP)
National Conference of CPA Practitioners (NCCPAP)
National Society of Accountants (NSA)
National Society of Tax Professionals (NSTP)