Scam-6: Return preparer fraud

Unethical return preparers make money off of customers by diverting a portion of the taxpayer's refund for their own benefit. The IRS warns that they also tend to charge inflated fees for their services and increase their clientele by advertising guaranteed larger refunds. According to the IRS, in fiscal year 2006, 109 tax return preparers were convicted of tax crimes and sentenced to an average of 18 months in prison. Their clients also had to pay a price. No matter who prepares your return, you are ultimately responsible for all of the information on the 1040. When the fraud is discovered, you'll owe not only the back taxes, but also interest and penalty charges. This swindle underscores the need for all taxpayers to choose carefully when hiring a tax preparer.

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