Can you trust your tax preparer? If you’re among the 60% of Americans who use a paid tax preparation service to file your state and federal tax return, you may be facing an increased risk of identity theft.  Anyone who helps you with your taxes sees a vast quantity of sensitive personal data — your social security number, employment history, investments and more.

Just because they’re dancing in a Statue of Liberty costume doesn’t mean you can trust them with your financial identity. If your tax preparer turns out to be a fraud, you’ve just given them a goldmine.


US Department of Justice Cracks Down on Over 30 Alleged Tax Fraudsters

On Wednesday March 27, the Department of Justice Tax Division announced that they’ve obtained permanent injunctions against more than 30 tax preparers and promoters for alleged fraudulent activity. The 30 organizations are accused of falsifying customer information and selling deceptive loan products at exorbitant fees.

The DOJ press release also alleges that many of these preparers used fake or stolen social security numbers.

Let’s examine this news and learn what you can do to protect yourself from tax season identity theft.


Tax Preparers Violate Federal Tax and Consumer Protection Laws in Over 10 States

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The DOJ is taking aggressive action to shut down income tax fraudsters.

In the past 10 years, the DOJ’s Tax Division has become more aggressive in its pursuit of tax law violators.

Assistant Attorney General for the Division, Kathryn Keneally, stressed that the department is working diligently to shut down tax fraud schemes.

“Fraudulent tax return preparers and tax scheme promoters too often seek to take advantage of their customers as well as to undermine our tax system,” she said in the press release.

“It is important that we make clear, especially now when honest taxpayers are filing their returns, that we will pursue those who would abuse our nation’s tax laws,” Keneally added.

According to the Department of Justice, the recent injunction orders have shut down fraudulent tax schemes and practices including:

  • Preparing phony tax-return forms with fabricated businesses and income;
  • Claiming false education and homebuyer credits;
  • Claiming false and inflated deductions;
  • Claiming false filing status;
  • Claiming false dependents;
  • Selling deceptive loan products;
  • Filing tax returns without customer consent or authorization;
  • Preparing bogus W-2 forms, based on information from employee paystubs;
  • Falsifying information on returns to claim inflated earned income tax credits; and
  • Filing fraudulent tax returns using stolen taxpayer identities to obtain improper tax refunds.

The press release cited a number of allegedly fraudulent tax preparers and promoters in Nevada, Missouri, California, Indiana, Florida, Louisiana, South Carolina, Mississippi, Michigan, New York and Kansas. Some of the organizations facing injunctions include Instant Tax Service, Mo’ Money Taxes LLC and MoneyCo USA LLC.


Worried About Your Tax Preparer?

Despite the DOJ injunctions, the majority of tax preparers aren’t identity thieves in disguise. If you’re concerned, ask them about the steps they take to safeguard your privacy.

If you’re considering a new tax preparation service or personal accountant, get a referral from a trusted friend or go online. Browse customer reviews and see if the company has any complaints on Scambook.


5 Extra Tips to Reduce Your Tax Season Identity Theft Risk

In addition to our original Tax Season Safety Tips, Scambook advises consumers to take the following precautions to reduce your identity theft risk:

1. Report IRS Phishing Emails and Fraud Sites. If you discover a website that claims to be the IRS but doesn’t begin with, be very careful because it might be fake. There are a few exceptions like, but in general, all pages on the real IRS website begin with Remember, never send private information in an online form unless the browser URL displays “https://” (the “s” stands for secure).

If you find a suspicious website claiming to be the IRS or receive a fake IRS email, report it by emailing [email protected].

2. Shred Hard Documents After You’re Done. Use a cross-cut paper shredder to destroy hard documents when you no longer need them. Cross-cutters are more secure than regular strip-cut shredders or tearing your documents by hand. Identity thieves often go dumpster diving for personal information right after tax season ends, so un-shredded documents place you at risk.

3. Save to CD or Flash Drive, Then Delete Your Computer Files. If you’re E-filing, make sure to use a strong password to protect the data file. Save the file to a CD or flash drive and then delete the personal return information from your hard drive. Store the CD or flash drive in a safe place, such as a lock box or safe.

This way, if your computer is hacked or stolen, the culprits won’t have any information from your taxes. Ask your accountant what measures they take to protect your information on their end.

4. If You Believe Your Identity Has Been Stolen. If you receive notification that someone else has used your social security number to file a tax return, fill out IRS Form 14039 immediately.

5. Check Your Mailbox Regularly. Even if you’re not expecting a refund, there are other reasons why the IRS might send you mail. Don’t let thieves scoop up any private information that might be sitting in your mailbox. Collect your mail every day and get a friend to pick it up for you if you’re going out of town.


What Do You Think About Tax Season Identity Theft?

So what do you think? Are you worried about your accountant or tax preparer? Share your thoughts in the comments.


See Also

IRS Accidentally Leaks Thousands of Social Security Numbers to the Public
5 Surprising Scenarios When You Should NEVER Give Your Social Security Number
Everything You Need to Know About the Online Sales Tax Bill 

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