Watch out for bad tax advisors.  The IRS is certainly keeping an eye out for them.  They are sending undercover clients to catch some of these guys.

“These guys” are tax preparers who know all the ins-and-outs of tax deductions, including the ones you aren’t even entitled to.  They help you navigate through the waters of income tax calculation by adding amounts that you never paid or subtracting amounts that you never made. 

Basically, they’re the guys that tell you that you can take a deduction on certain things, if you skew the numbers a certain way in your income tax calculation.  They’re the ones who tell you to list your dog as a dependent, or to start a phony business.  

Or, in the case of a Miami tax group, they are the guys who tell you that you’re eligible for the First Time Homebuyer’s Credit when you haven’t even purchased a home that year!  In another case, this time in Kansas City, the IRS won an injunction against a tax preparer who worked out of a restaurant.  He was notorious for writing larger than needed deductions and for understating the income of his clients. 

Indeed, the IRS Office of Professional Responsibility, headed by the famous California tax attorney Karen Hawkins, has been cracking down on false return preparers.  Ms. Hawkins took the leadership of the Office last year and has made her stance clear on professionalism in the tax industry–the IRS will not tolerate lack of professionalism.   

As for the taxpayers– be very wary of shady tax professionals.  If your tax advisor is suggesting a deduction that seems fishy to you, perhaps you need to get a second opinion.  The IRS provides tips on chosing a tax preparer on their website.   

Be cautious.  Otherwise, you could be hit with a lot more than back-tax.   

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