How to File a Complaint as a Tax Preparer

• admin
• February 17, 2025
• 6 min read

How to File a Complaint Against a Tax Preparer for Fraud or Misconduct

While many tax professionals uphold high standards of integrity, instances of misconduct or fraud can occur, potentially leading to financial loss and legal complications for taxpayers. Understanding how to identify unethical behavior and knowing the proper channels to report such actions are crucial steps in safeguarding your financial well-being and ensuring compliance with tax laws.

Key Takeaways

• Recognize the Signs of Tax Preparer Misconduct: Be aware of red flags indicating potential fraud or unethical behavior by tax preparers.
• Follow the Correct Reporting Procedures: Learn the specific forms and steps required to file a complaint against a tax preparer.
• Understand the Importance of Documentation: Gather and maintain all necessary records to support your complaint effectively.

Identifying Tax Preparer Misconduct

Tax preparer misconduct can manifest in various forms, from intentional fraud to negligent practices. Common indicators include:

• Unwarranted Refund Promises: Preparers who guarantee substantial refunds without reviewing your financial details may be engaging in fraudulent activities.
• Fees Based on Refund Amount: Charging fees contingent upon the size of your refund is considered unethical and is a red flag.
• Failure to Sign Returns: Legitimate preparers are required to sign the tax returns they prepare and include their Preparer Tax Identification Number (PTIN). Those who refuse to do so, often referred to as “ghost preparers,” should be avoided.
• Depositing Refunds into Their Own Accounts: Preparers should never direct your tax refund into their personal or business accounts. Ensure that your refund is set to be deposited directly into your own bank account.
• Altered Tax Returns: If the copy of the tax return provided to you differs from the one filed with the IRS, this is a serious concern indicating potential misconduct.

Steps to Report Tax Preparer Misconduct

If you suspect that your tax preparer has engaged in unethical or fraudulent behavior affecting taxpayers, it’s essential to take prompt and appropriate action. Here’s a step-by-step guide to filing a complaint:

1. Gather Documentation
   • Copies of Tax Returns: Obtain copies of the tax return you intended to file and any versions provided by the preparer.
   • Communication Records: Keep records of all communications with the preparer, including emails, text messages, and written correspondence.
   • Payment Receipts: Save receipts or records of payments made to the preparer for their services.
   • Promotional Materials: Collect any business cards, flyers, or advertisements from the preparer.
2. Complete the Necessary Forms
   • Form 14157: This form, titled “Complaint: Tax Return Preparer,” is used to report misconduct or improper practices by a tax preparer. It requires detailed information about the preparer and the nature of the misconduct.
   • Form 14157-A: If the preparer filed or altered your tax return without your consent, complete the “Tax Return Preparer Fraud or Misconduct Affidavit.” This affidavit allows you to outline the specific fraudulent actions and their impact on your tax filings.
3. Submit the Forms and Supporting Documents
   • Mail or Fax: Send the completed forms along with all supporting documentation to the IRS. The mailing address and fax number are provided in the form instructions. Ensure that you retain copies of everything for your records.
4. File an Amended Tax Return if Necessary
   • Correcting Errors: If the original return filed by the preparer contains errors or fraudulent information, file Form 1040-X, “Amended U.S. Individual Income Tax Return,” to correct your tax records. This step is crucial to rectify any discrepancies and to protect yourself from potential liabilities.
5. Monitor Your Tax Account
   • Regular Checks: Use the IRS’s online tools to monitor your tax account for any unauthorized activities or changes. Regular monitoring can help you detect and address issues promptly.

Preventative Measures

To minimize the risk of falling victim to tax preparer fraud in the future, consider the following precautions:

• Verify Credentials: Ensure that your tax preparer has a valid PTIN and, if applicable, professional certifications such as Certified Public Accountant (CPA), Enrolled Agent (EA), or attorney status.
• Research Reputation: Check for reviews or any disciplinary actions against the preparer. The Better Business Bureau (BBB) and state boards of accountancy are valuable resources for this information.
• Avoid Signing Blank Forms: Never sign an incomplete or blank tax return. Review all documents thoroughly to ensure accuracy before signing.
• Secure Personal Information: Be cautious about sharing sensitive information. Ensure that the preparer has adequate security measures in place to protect your data.
• Maintain Copies of All Documents: Keep copies of all tax returns and related documents for your records. This practice is essential for future reference and in case any issues arise.

Frequently Asked Questions

1. What should I do if I discover unauthorized changes on my tax return?
   • If you notice unauthorized alterations, immediately file Form 14157-A to report the misconduct and submit an amended tax return using Form 1040-X to correct the discrepancies.
2. Can I report a tax preparer for unethical behavior even if they didn’t commit outright fraud?
   • Yes. If a tax preparer engages in unethical practices—such as inflating deductions, omitting income, or failing to provide you with a copy of your tax return—you can still file a complaint using Form 14157. The IRS takes all misconduct reports seriously, even if they don’t involve outright fraud.
3. Will I be held liable if my tax preparer committed fraud on my return?
   • As the taxpayer, you are ultimately responsible for the accuracy of your tax return, even if a preparer filed it on your behalf. If fraud is discovered, you may need to pay additional taxes, interest, or penalties. However, by filing a complaint and proving that the fraud was committed without your knowledge, you may be able to request relief from penalties.
4. How long does it take for the IRS to investigate a tax preparer complaint?
   • The time frame varies depending on the complexity of the case. The IRS does not publicly disclose investigation timelines, but complaints are reviewed in the order received. If necessary, the IRS may contact you for additional information during the process.

Empowering Your Financial Security

Taking action against a fraudulent or unethical tax preparer is essential to protect yourself and others from financial harm. By recognizing red flags, documenting misconduct, and filing a complaint with the IRS, you help uphold the integrity of the tax system. Additionally, practicing due diligence when selecting a tax preparer can prevent future issues.

If you believe you’ve been a victim of tax preparer fraud, don’t delay—gather your documents, submit your complaint, and take the necessary steps to correct any inaccuracies in your tax filings. Being proactive can save you from financial and legal troubles down the road. For more information on managing your tax responsibilities, visit FileLater.com.