Info on Scam Tax Preparers from the Maryland Comptroller - Individual Tax Preparers

The Maryland Board of Individual Tax Preparers wants you to know how to protect yourself from tax fraud.

Scam preparers are not always easy to spot. Like all con artists, scam preparers talk a good line, and sound professional. But here are some of the games they play.

Fake W2 Income Statements

Scammers create fake W2, Wage and Income Tax Statements showing your employer withheld from your income, and submitted to the IRS, more money than your employer actually paid. Scammers know that more withholding reduces your income, so you pay less tax. Make sure your W-2 details are accurate.

Phony or inflated deductions & credits

Larger deductions on your tax return reduce your income, so you pay less tax. Scam preparers frequently report false medical expenses, mortgage deductions, and charitable deductions in cash or in kind (as to the Salvation Army), on your Schedule A, Itemized Deductions, or inflate the ones you had.

Scammers may pad or create phony business expenses for your Schedule C, Profit or Loss from Business. They create fake depreciation for Schedule C and Form 4562, Depreciation and Amortization. So double check your itemized deductions and business expenses, including depreciation!

Even farmers are scammed by preparers who insert phony expenses into Schedule F, Profit or Loss from Farming.

Fraudulent preparers frequently manipulate Form 2441, Child and Dependent Care Expenses by reporting larger payments to care workers than the taxpayer actually made.

Finally, Schedule EIC, Earned Income Credit is a frequent target for fraudulent preparers, who underreport the taxpayer’s income to enable the taxpayer to qualify for the credit, or make up names for one or more children so the taxpayer claims a larger credit.

The Maryland Department of Labor’s Board of Individual Tax Preparers, in partnership with the Office of the Comptroller, is on the lookout for scam preparers. But taxpayers who file fraudulent returns will owe back taxes, interest and penalties.

Anyone can fall victim to a tax scam. But fraudulent preparers particularly target minority and lower income communities, and communities where English is not the primary language.

So, here’s how to protect yourself.

Review your return.

Check to make sure your preparer hasn’t inserted false or inflated numbers. If your tax return looks too good to be true, it probably is. Confirm your bank information.

Know your tax preparer.

Verify their credentials. All tax preparers have a Preparer Tax Identification Number (“PTIN”), and an additional credential as an attorney, certified public accountant, enrolled agent, Maryland registered preparer, or IRS annual filing season program participant.

The Maryland State Board of Individual Tax Preparers lists Maryland registered preparers, under Registration Search.

The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. Tax preparers with PTINs, and a credential as an attorney, certified public accountant, enrolled agent, or annual filing season program participant, are listed there.

Make sure your tax preparer signs your return

The tax preparer must sign, date, and list his or her or her PTIN on your return. Do not use a “ghost” tax preparer who provides tax preparation for a fee, but does not sign the tax return.

Get copies of your returns.

Make sure your tax preparer provides you with a copy of your federal and state return

Get your refund the right way.

It is unlawful for a tax preparer to provide you with a refund by cash or personal check. Refunds are only available by check from the IRS or state, or by direct deposit to your bank account or prepaid debit card.