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IRS ISSUES WARNING ON FRAUDULENT TAX PREPARERS; TAX UPDATE HAS 'REAL' WARNING SIGNS

January 12, 2005

As another tax return filing season gets underway, the IRS has issued a new "fact sheet" warning taxpayers not to use fraudulent return preparers. They helpfully offer the following "Helpful Hints When Choosing a Return Preparer":

· Avoid tax preparers who claim they can obtain larger refunds than other preparers

· Avoid preparers who base their fee on a percentage of the amount of the refund.

· Use a reputable tax professional who signs your tax return and provides you with a copy for your records.

· Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after the return has been filed.

· Review your return before you sign it and ask questions on entries you don't understand.

· No matter who prepares your tax return, you (the taxpayer) are ultimately responsible for all of the information on your tax return. Therefore, never sign a blank tax form.

· Find out the person’s credentials. Is he or she an Accredited Tax Preparer, Enrolled Agent, Certified Public Accountant (CPA), Licensed Public Account or Tax Attorney? Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection and appeals. Other return preparers may only represent taxpayers for audits.

· Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

· Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?

REAL WARNING SIGNS

This is, of course, all sound advice, but it is incomplete. You also should carefully watch for the following "red flags" indicating a potentially fraudulent tax preparer:

· You meet the preparer in an internet chat room where he goes by the name “Fraudster.”

· He schedules your initial consultation at an interstate highway rest stop.

· When you arrive for your initial consultation, he has already electronically filed your return and withheld your fee from your refund.

· He asks you to watch his meth lab while he runs to the drugstore.

· He insists “parolee” is just another way to spell “CPA.”

· He says he won’t charge you if you will help him claim his rightful inheritance as son of the late president of Nigeria.

Happy filing!

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