DOJ Warns Of Increased Tax Fraud Threats


The U.S. Department of Justice issued a serious warning to the public about the looming threats of fraudulent tax return processors and tax scheme promoters.

Tax Day is officially just weeks away, and with that, the DOJ issued a statement to taxpayers on Thursday (March 31) warning them to be even more wary of companies guaranteeing a refund or promising a surefire way to reduce taxes.

While the agency noted that individuals must be held responsible for the contents of their own returns, Acting Assistant Attorney General Caroline D. Ciraolo still had some cautionary advice as tax season remains in full swing.

“Every year, thousands of federal income tax returns are prepared by people who care much more about making a quick buck than about preparing accurate returns,” Ciraolo explained, noting that while most tax return preparers are honest, there are many out there looking to take advantage of taxpayers.

“Taxpayers might think that they’re getting a good deal on their taxes, or that as long as someone else prepares the return, they’re not responsible. They’re wrong,” she said.

When a return is prepared incorrectly, the taxpayer is the one held accountable and will be required to pay the owed taxes or pay back funds they were not entitled to receive. Ciraolo said that, in some cases, substantial interest and penalties are also owed, but there are red flags that can help taxpayers to decipher if the preparer they are using may have fraudulent intentions.

Those warnings signs include:

  • A refund should never be deposited directly into a preparer’s bank account.
  • Taxpayers should never sign a tax form that is blank or sign a return or form that they have not read first.
  • Avoid using preparers who mischaracterize expenses.
  • Do not use preparers who fabricate expenses or deductions or who claim bogus credits.

While the IRS offers some basic tips and guidelines to finding a reputable tax professional, it was recently discovered that almost half of 13 “free” E-File tax sites that the agency recommended failed rigorous security testing.

The sites were scored by the Online Trust Alliance (OTA) in three categories: consumer protection, site security and privacy, with 100 points possible in every category. Bonus points could be won, and notable flaws caused deductions.

Making the “honor roll” required a combined score of 80 percent or better across all three categories without scoring below a 55 in any individual category. OTA did not report individual site scores.