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The Honolulu Advertiser
Posted on: Sunday, April 8, 2007

How you can spot crook tax preparers

By Susan Tompor
Detroit Free Press

The tax-time crunch means the Internal Revenue Service is once again cracking down on cheats.

And face it, folks, you should know if you're cheating or teaming up with a tax preparer who is stretching out a string of lies on your tax return.

Here are two clues: If you don't have any kids, why are you listing a child with a Social Security number on your 1040? Or if you have six kids, why would you let a neighbor "borrow" one of your kids to get a bigger refund?

On Tuesday, the IRS charged that certain franchises of Jackson Hewitt Tax Service Inc. in Detroit and elsewhere cheated the government out of an estimated $70 million through bogus refunds.

According to filings in a federal court in Detroit, the franchises made false claims regarding the earned income tax credit. The credit can range from $412 to $4,536 this tax season for lower-income working families and individuals who qualify.

The credit — while good news for honest working families with children — can become a cheater's paradise.

The tidbits in the complaint filed Tuesday offer more clues on how to spot a tax cheater:

Some franchise managers are accused of taking cash kickbacks from customers to help claim bogus tax refunds.

Again, here's another good clue: If a tax preparer demands $300 out of a $1,000 tax credit, grab your things and run for the door. An honest preparer charges a flat fee to prepare your returns. You don't pay a percentage — or give a kickback — based on the refund's size.

Luis D. Garcia, an IRS spokesman in Detroit, said taxpayers should be wary of anyone who promises a rich refund before seeing the paperwork.

"We encourage people to self-correct their returns by filing an amended return if they see a problem — and doing that as quickly as possible," Garcia said.

Get a 1040X and save yourself a whole lot of grief.