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Fraudulent Preparers Make Troubles for Taxpayers with the American Opportunity Credit

Authored By: Iowa Legal Aid LSC Funded
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Information

Preparer Fraud

 Unfortunately, some unscrupulous preparers have falsified claims for the American Opportunity Credit on tax returns using the promise of large refunds to attract customers. 

 
Who are some of the taxpayers who have been affected?
  • Some immigrants for whom English is not their first language and who are not as familiar with the U.S. tax system.
  • Lower income taxpayers needing money for school who were told that this credit could be claimed ahead of filing a tax return. The preparers used the taxpayer’s information to file false returns and steal refunds.
 
What can happen to the taxpayers?
  • Taxpayers may be required to pay back refunds they received with penalty and interest. 
  • Problems with tax returns that are not fixed can lead to problems with adjusting immigration status. 
  • Taxpayers who didn’t get refunds will have to try to prove that they didn’t get the stolen refunds and shouldn’t have to pay back the IRS. 
 
Fraudulent preparers are hard to catch.
  • Paid preparers must sign a tax return and provide a Practitioner Tax Identification Number (PTIN) under U.S. tax law.  Fraudulent prepares often do not sign the tax return.
    • If a paid preparer isn’t willing to sign a return, take back your documents and go somewhere else. 
  • If you learn that your preparer did something wrong, you can report your preparer by completing an IRS Form 14157 which is available at www.irs.gov.  This may help to stop the preparer from hurting other taxpayers.
    • Note: You should know that if the preparer is investigated, it may lead the IRS to review your return. 
  • If there are problems with your return, you may end up owing money to the IRS. 
  • Taxpayers who fix the problem before the IRS finds the problem, are less likely to be charged  high penalties for filing a return with large mistakes.
Last Review and Update: Feb 19, 2016
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