Question from a reader:”My girl friend, who came from another country, had her taxes prepared by a guy who said he had the refund go into his account. That guy was a foreigner too. When she went to the IRS website to check on her refund status (it had been over three weeks), she found out that her refund was being held up because of an investigation. When she tried to contact the tax preparer he said that he can’t talk to her anymore and that she got him in trouble. What can or should she do?”
My answer is that first and foremost it is illegal for a tax preparer to have refund money go straight into his account. It is unethical as well and if you stop and think about it, it is a swamp for fraud. This is different than refund anticipation loan (RAL) where the fees are withheld by a bank and you can get your money advanced in one to three days or have your tax preparation fees withheld from your anticipated refund. These products are being reviewed by the IRS as well and may be shut down by Congress in a few years as well because the interest rates for the fee advances are pretty steep – think 20-40% steep. That also doesn’t include $29 processing fees.
In your friend’s case I strongly suggest that she take care of business by calling the IRS and getting them after this character. He has no right to not tell her the status of the refund and if your friend isn’t aware of what was asked or what happened, she may accidentally have been a party to a fraud being run by the bogus tax prep guy. Boo hiss.
The sad part is that she, as an individual, is responsible for what she signed for taxes under penalty of perjury. We all are responsible for what we sign when we complete our own tax returns. The IRS knows that there are wolves who prey on the fellow and sister countrymen (and women) and either by their innocence or their sense of greed have them filing fraudulent returns. The expression is that some people who are “FOTB”-”fresh off the boat” or “fresh over the border” are simply not aware of what our tax laws are and they may innocently be trying to stay out of trouble without realizing that they are making their situation worse. The net result is that the refunds may be denied and at worse case there may be fines and jail time.
Your friend should ask the IRS what steps she can take and see about filing an amended tax return if there were issues and concerns and perhaps if there was a large refund settle for a smaller refund and/or a balance due.
When you are filing your taxes a legit tax pro will never ever ask to have any potential refund directed to his or her account. A very bad and quite illegal conflict of interest.
Good luck and hope the rest of the month of May goes well for your friend!
May 01 2009
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Kim Isaac Greenblatt
Tax Preparers Cannot Accept Your Refunds
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