The 2019 IRS “Dirty Dozen” Tax Scams #4: Tax Preparer Fraud – The Ultimate Deception

It’s a horrible feeling to know that someone scammed you like that. It makes you doubt yourself.”

– Cindy Predmore, age 61, of Pennsylvania, who was scammed out of nearly $4,600 by her accountant

For some time now, tax preparer and accountant Nick Chacanias has been getting away with scamming taxpayers. He has apparently stolen over $190,000 from at least 18 hardworking taxpayers, but will be serving no more than 2½ years in prison. One of his victims was a small business owner who thought that the $15,000 he paid to Chacanias was going to his quarterly tax payments – instead it went straight into the accountant’s pocket. This victim and numerous others are outraged at Chacanias’ light sentence and the lack of options available to them for recovery.

While most tax preparers are honest and provide a valuable service to the people they serve, some are shady characters that do incalculable damage to people’s finances and to their lives.

Choosing the Right Tax Preparer

It is crucial that you select a qualified tax preparer to assist you with your annual return. Here are some tips on choosing the right person:

  1. Make sure your tax preparer has a year-round office – beware of temporary pop-up shops and tax preparers who won’t be around after mid-April.
  2. Check your tax preparer’s credentials, and make sure that there are no disciplinary actions filed against them. You can check in with the Better Business Bureau, State Board of Accountancy, Enrolled Agent page, and for attorneys, the California State Bar Association.
  3. Do not hire a tax preparer who claims that they can get you a bigger refund than another professional. Your tax liability or refund is based on your income, receipts, and applicable credits.
  4. Do not hire a tax preparer who charges a percentage of the refund they obtain for you. This is a red flag for one of many tax preparer scams. These scam artists may, among other things, try to convince you to take deductions or credits that don’t apply to you.
  5. Review your tax return before filing! Remember that YOU are the one responsible for the accuracy of your return. NEVER sign a blank return.
  6. Have your tax preparer e-file your return and send you a copy for your records. The copy should include their Preparer Tax Identification Number (PTIN).
  7. Make sure that your tax refund is sent directly to you, and not to your preparer’s account.

Tax preparers are subject to high penalties and criminal prosecution for their misconduct. If you have encountered an abusive tax preparer, you can file Form 14157, Complaint: Tax Return Preparer or Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

Coming up next is our take on IRS Dirty Dozen #5 and #6, Inflated Tax Refunds and Falsifying Income.