In today’s day and age, there are many unscrupulous “ghost” accounting firms out there. They use various scams to trick unsuspecting taxpayers. The best way to avoid them is to learn to recognize these five common red flags.

IRS Warns Taxpayers to Choose Carefully

Recently, the IRS issued a warning that urged all Americans to choose carefully when hiring a tax preparer.

“Tax professionals provide an incredibly valuable service to taxpayers and our nation’s tax system,” said IRS Commissioner Chuck Rettig. “We encourage people to carefully choose who they trust with their most sensitive tax and financial information. There are some simple steps taxpayers can follow to make sure they’re getting good, professional help.”

Since you are ultimately responsible for what is reported on your tax return, it’s smart to practice caution when choosing a tax preparer.

5 Red Flags of Unscrupulous Accounting Firms

1)      Accepts only Cash

A major red flag of “ghost” accounting firms is that they only accept cash payments. These types of tax professionals are probably looking to make a fast buck.

If a tax preparer asks you for an upfront payment and doesn’t give a receipt, you might be dealing with a scammer.

2)      Inflated Return Claims

You also may be dealing with the wrong accountant, if they are making bold claims about large tax refund checks.

Accounting firms who do promise inflated refunds are generally up to no good. More often than not, these types of tax professionals are unable to deliver on their lofty promises.

3)      Charges Fees Based on a Percentage of your Refund

One of the best ways to protect from income tax fraud yourself is to be an educated consumer. You should know that reputable accountants do not charge fees based on a percentage of your refund.

The standard industry practice is to charge a flat or hourly rate.

4)      Does not have Professional Certifications

Your accountant should also have professional certification, which qualify them to prepare your taxes. A Certified Public Accountant has the training and experience necessary to properly prepare individual and business tax returns.

If your accountant is not a local CPA, you could be at a higher risk of fraud. To be certain who you are working with, ask to see a valid 2019 preparer tax identification number.

5)      Works only over the Phone

There are many phony accountants out there who reach out over the phone to unsuspecting taxpayers. Whether they are around the block or across the world, these “ghost” accountants sometimes do not even exist.

Before you choose an accounting firm, do your homework. Google them. Look for reviews. Ask questions. Check references. The real pros are the ones who provide personal service.

As you search for a tax professional, watch out for these five red flags. No reputable accountant would follow any of these practices. If you have any questions or would like help preparing your taxes, contact a true professional accounting firm.