Beware of Last Minute Illegal Tax Tricks

April 1, 2009 - PRLog -- The California Tax Education Council (CTEC) warns thousands of illegal tax preparers are doing business statewide and use the last minute rush to prey on uninformed or distracted taxpayers.  Below are the most common, and often costly, tricks used by dishonest tax preparers.

Tax Trick 1:  No license or registration? No accountability
California law defines only four groups of professionals who can prepare your tax return for a fee:  Attorneys, Certified Public Accountants (CPAs), CTEC Registered Tax Preparers (CRTPs) or Enrolled Agents (EAs).  

If you cannot verify the tax preparer as one of those four professionals, he or she may be breaking state law.  Hiring an illegal tax preparer can prevent you from having legal recourse against fraud, as well as increase your chances for additional taxes, interest and fines.  If you hire an illegal tax preparer, there is no guarantee of accountability or protection against fraud if problems arise.  

Tax Trick 2:  Advertises guaranteed or bigger refunds  
As tempting as it sounds, no tax preparer can guarantee you a refund, at least not legally.  To do so most dishonest tax preparers will exaggerate deductions and credits.  The taxpayer will get the refund as promised, but the IRS will eventually catch the error.  

Remember in the end, it is you, not the tax preparer, who is ultimately held accountable for the information on the tax return, no matter if it is done accurately or fraudulently.  

Tax Trick 3:   Claims only your signature is required
By law paid tax preparers are required to sign your tax return.  Their signature signifies that the information on your tax return is true and correct to the best of their knowledge.  If they do not sign, there is no proof of accountability.  Think about it:  If the tax preparer is unwilling to stand by his or her work and sign your tax return, is that not a red flag warning?  

For more information or to verify a CRTP visit www.ctec.org or call (877) 850-CTEC.

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CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect the public by registering tax preparers within the state. Last year CTEC registered more than 42,000 tax preparers statewide.