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How I Found Out My Tax Preparer Was Arrested

A couple of years ago, I had to face reality and file my first post college tax return.

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No longer privy to the substantial discounts major tax preparation companies offer to college students, I hunted for the cheapest way to file my taxes without jeopardizing my refund. An uncle suggested someone who would handle all of my forms for a $50 flat fee. The previous year, I had worked in four states, lived in three and graduated from college, so I knew my tax return wasn’t going to be simple.  I hadn’t made too much money between my internships and part time job so I wanted to avoid the nearly $200 fee quoted to me over the phone for my complicated tax return.

The $50 price was right, but I should’ve known something was up right away. After waiting nearly two hours, the preparer ignored my questions, was insulted when I questioned her credentials and got me to sign forms without carefully reading them. My mistake, but she had come recommended.

My uncle later admitted he had some qualms.  He was skeptical because she had never fully explained the deductions she was filing on his behalf, but he didn’t know how to check her credentials. He also couldn’t find someone offering such an attractive price. Unfortunately, in this case cheaper wasn’t better.

My uncle visited her office about three weeks after my appointment because she wouldn’t return calls. But her office was locked and someone at a neighboring business told my uncle our preparer had been arrested for allegedly funneling a client’s tax refund to her own account. She also ran a money wiring business on the side, and was allegedly wiring some of those funds into her personal accounts as well. When I heard the news, I immediately called the help line for the Internal Revenue Service. Fortunately, it had received my forms and sent me a copy.

I didn’t find any fraudulent claims, but I ended up with a larger refund than what she had quoted me. Although I never figured out why, since she had been accused of routing other clients’ refunds into her own account, I couldn’t help wondering if she had been planning to keep part of my refund for herself.

I now realize that I should vet my preparer and check recommendations with the Better Business Bureau to see if any complaints have been filed against a professional I’m considering working with. Apparently, this wasn’t my preparers first time getting in trouble and had I known, I would have looked for someone else or filed my taxes online.

At the very least, I should have dropped her after being so dissatisfied with my office visit.
Last year I skipped the tax preparer’s office and did my return with low-cost online tax software. There were fewer headaches, and I still got a refund.

SEE VIDEO: Tax Report: Tax Preparer Fraud – Are You Liable?

Readers, have you had any nightmares with tax preparer? What warning signs did you ignore?


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About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.