What is the scam?
Tax preparer fraud is a type of financial scam where a tax preparer—someone you hire to file your taxes—files a false return, inflates deductions, or misuses your personal information for their own benefit. Unlike most scams where a stranger contacts you, this one involves someone you’ve chosen to trust with your most sensitive financial details.
The goal can vary. Some dishonest preparers inflate your refund so they can take a larger fee, or divert part of the refund to their own account. Others steal your personal information—your Social Security number, income records, and bank details—and use it for identity theft. In some cases, they file returns in your name without your knowledge and pocket the refund entirely.
This scam is especially common during tax season, and it can affect anyone who uses a tax preparer. The IRS receives thousands of complaints about fraudulent preparers each year, and the consequences fall on you—even if someone else filed the return.
How this scam usually works
A dishonest tax preparer often operates out of a storefront, online service, or even through word-of-mouth referrals. They may seem professional and knowledgeable, which makes them harder to spot. The scam typically follows one of a few patterns.
In one common version, the preparer inflates deductions or fabricates credits on your return—things like fake charitable donations or business expenses you never had. This increases your refund, and the preparer takes a percentage as their fee. You may not realize anything is wrong until the IRS flags your return for an audit. At that point, you’re the one responsible for repaying the excess refund, plus penalties and interest.
In another version, the preparer directs all or part of your refund to their own bank account. They may tell you the refund is delayed or give you a smaller amount than expected, keeping the difference. Because you’ve already signed the return, it can be difficult to prove what happened.
Some preparers go further and steal your personal information outright. With your Social Security number, date of birth, and income details, they can open accounts in your name, file additional fraudulent returns, or sell your information. This is a form of identity theft that can take months to resolve.
A key red flag is a preparer who asks you to sign a blank return, refuses to give you a copy of your completed return, or won’t include their IRS Preparer Tax Identification Number (PTIN)—a unique number the IRS requires all paid preparers to have.
How to protect yourself
The single most effective step is to verify your preparer before handing over your information. The IRS offers a free directory of credentialed preparers at IRS.gov where you can search by name and location. Legitimate preparers include Certified Public Accountants (CPAs), Enrolled Agents, and tax attorneys.
Always review your completed return before signing it. Make sure the income, deductions, and refund amount match what you expect. If your preparer added deductions or credits you don’t recognize, ask for an explanation. If the answer doesn’t make sense, don’t sign.
Never sign a blank tax return. A legitimate preparer will always walk you through your completed return and give you a copy for your records. Your preparer should also sign the return themselves and include their PTIN. If they refuse to do either, that’s a serious warning sign.
Be cautious of preparers who promise unusually large refunds before reviewing your information, or who base their fee on a percentage of your refund rather than a flat rate. For a broader look at what trusted professionals should and shouldn’t ask of you, see What Real Companies Will Never Ask You To Do.
What to do if you’ve been affected
If you suspect your tax preparer filed a false return or misused your information, act quickly. Start by requesting a copy of your tax return transcript from the IRS at IRS.gov/Get-Transcript. Compare it against what you expected to be filed. Any differences—unfamiliar deductions, a different refund amount, or a bank account you don’t recognize—are signs of fraud.
Report the preparer to the IRS using Form 14157 (Complaint: Tax Return Preparer). If you believe a return was altered or filed without your consent, also file Form 14157-A (Return Preparer Fraud or Misconduct). You can also report to the FTC at ReportFraud.ftc.gov.
If your personal information was compromised, place a fraud alert on your credit reports through any of the three major credit bureaus—Equifax, Experian, or TransUnion. Monitor your bank accounts and credit reports for unfamiliar activity. For step-by-step guidance on locking down your accounts, see How To Secure Your Online Accounts.
Watch for follow-up scams. Scammers who have your tax information may contact you later posing as the IRS or offering to “fix” the problem for a fee. The IRS initiates contact by mail—not by phone, text, or email.
Report the scam: Filing a report helps protect others. You can report to the FTC at ReportFraud.ftc.gov or contact your state attorney general’s office.