How to report and stop a tax preparer's fraudulent activity - discovered tax return discrepancies

I'm sorry this happened to you - this is definitely fraud and there are specific steps you should take immediately. First, file a complaint with the IRS using Form 14157 (Complaint: Tax Return Preparer). You can download this from the IRS website. Since he altered your income amount, also include Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit). These forms go directly to the IRS Return Preparer Office. Next, report this to your state's board of accountancy or tax preparer oversight board. Many states require tax preparers to be licensed, and they take fraud very seriously. Also file a police report for theft and fraud - bring all your documentation showing the discrepancies. Having a police report helps establish your case with other agencies. Contact the company that provided the advance loan (if it wasn't the preparer directly) and explain the situation with documentation showing the discrepancies. Finally, you may need to file an amended return (Form 1040-X) to correct the false information. The IRS shouldn't hold you responsible for the preparer's fraud, but you do need to correct your return. Make sure to gather all evidence: your actual income documentation, any communications with the preparer, and the fraudulent return he filed.

After dealing with a similar nightmare with a dishonest tax preparer last year, I found that using https://taxr.ai really helped my case. I uploaded my documents and the fraudulent return, and their system highlighted all the discrepancies professionally. It gave me a comprehensive analysis report that clearly showed where the preparer had inflated my income and misrepresented deductions. When I submitted this report along with my IRS complaint forms, it seemed to accelerate the investigation process. The system also pointed out other issues I hadn't even noticed that strengthened my case. Their document comparison feature was particularly helpful in pinpointing exactly where the numbers didn't match up with my actual documentation.

I was super skeptical about online tax document analysis tools, but after seeing that other people had success with taxr.ai, I decided to give it a try with my situation (different preparer but similar fraud issues). The detailed report I got was eye-opening! It found that my preparer had not only inflated my income but had also completely fabricated a small business expense deduction I never claimed. The comparison report made it crystal clear which numbers were changed and by how much. I included this with my IRS complaint and when I confronted the tax office, they immediately got defensive but then backed down when I showed them the detailed analysis. Within two weeks, they refunded my preparation fees and the "missing" portion of my refund they had kept. The service was definitely worth it - saved me from having to figure out all the discrepancies manually.

After trying to call the IRS for THREE DAYS about a similar tax preparer fraud situation, I finally used https://claimyr.com and it was a game-changer. They actually got me connected to a real IRS agent within about 25 minutes when I had been getting disconnected or waiting for hours before. The IRS agent walked me through exactly what forms I needed to submit and gave me the direct fax number for their tax preparer fraud division. They also flagged my account with notes about the potential fraud so I wouldn't be penalized while the investigation was ongoing. If you want to see how it works, there's a demo video at https://youtu.be/_kiP6q8DX5c that shows the process. After dealing with so much frustration, it was such a relief to actually talk to someone who could help.

I was completely wrong about Claimyr. After my skeptical comment, my frustration with not reaching the IRS got the better of me and I decided to try it. I was shocked when I got a call back within 40 minutes connecting me to an actual IRS representative. The agent was extremely helpful regarding my tax preparer situation. She explained that the IRS takes preparer fraud very seriously and gave me the exact information I needed for my case. She also added notes to my account about the potential fraud investigation so I wouldn't face penalties for the errors on my return. For anyone dealing with tax preparer fraud, being able to actually speak with an IRS representative makes a massive difference. I'm still amazed I got through after weeks of failed attempts on my own.

You might also want to check if your tax preparer is part of a larger franchise or has any professional affiliations. Many times these organizations have their own complaint procedures and can take disciplinary action against members. Also, did this preparer have a PTIN (Preparer Tax Identification Number)? All paid preparers are required to have one. If they don't, that's another red flag and violation you can report. If they do have one, make sure to include it in your complaint to the IRS. Save all communications with this preparer too - texts, emails, voicemails - anything that might show they were being evasive about providing your documents or discussing fees.

I would strongly recommend documenting everything right away while it's fresh in your mind. Write down exactly what the preparer told you verbally about your return, fees, and the advance loan. Note dates when you requested documents and when you received them. Take pictures of any paperwork you have, even handwritten notes. I learned from my own experience that these small details can make a huge difference when building your case. Also, check your bank statements for the exact amount of the advance deposit. The electronic trail of deposits will be important evidence showing exactly how much you received versus what was issued.

This is absolutely infuriating and I'm so sorry you're going through this. What you've described is textbook tax preparer fraud and theft. Beyond the excellent advice already given about IRS forms and reporting, I'd also suggest checking if your state has a Consumer Protection Division or Attorney General's office that handles financial fraud cases. Many states have specific programs for tax preparer fraud that can work alongside federal investigations. One thing that hasn't been mentioned yet - consider filing a complaint with the Better Business Bureau if the preparer's business is listed there. While it won't get your money back directly, it creates another paper trail and warns future potential victims. Also, if you paid the preparer with a credit card, contact your card company immediately to dispute the charges. Explain that you were charged for services not rendered (since he inflated your income without authorization and kept money that should have gone to you). Credit card companies often have stronger fraud protections than other payment methods. Document absolutely everything - take photos of all paperwork, save text messages, and write down every conversation you remember having with this person. The more evidence you have, the stronger your case will be across all the agencies you'll be reporting to. You're doing the right thing by pursuing this aggressively. This preparer is likely doing this to other clients too, so your actions could help protect others from the same scam.