Tax preparers diverting refunds to their accounts - is this legal or a total scam?

Tax professional here. You're absolutely right to be concerned. This practice is called refund diversion and it's against IRS regulations. Legitimate tax preparers should NEVER have your refund deposited into their accounts first. They can include their fee in your tax preparation, but the refund should go directly to YOU. A few important points: • Tax preparers must provide you with a copy of your return before filing • They must disclose ALL fees upfront • Refund advances are loans with interest/fees that should be clearly explained • Many preparers use "refund transfer" products that hide extra fees • Your preparer should have a PTIN (Preparer Tax Identification Number) If you suspect fraud, report it to the IRS using Form 14157 (Complaint: Tax Return Preparer). Also report to your state's attorney general and the Better Business Bureau. Don't let these scammers continue to take advantage of others.

I went through something similar last year and spent WEEKS trying to figure out what was happening with my return. The whole process was so frustrating. Finally I found this tool called taxr.ai that cleared everything up. It actually explained my return and showed me exactly where my money was going. I could see the preparer fees that were being taken out and confirm if they matched what I agreed to. Would have saved me so much stress if I'd found it earlier. https://taxr.ai

After my tax preparer pulled this exact scam on me (took my $3400 refund, gave me $2800 and claimed the rest was "processing fees"), I spent WEEKS trying to reach someone at the IRS. Phones were always busy, couldn't get through to a human being. I found this service called claimyr.com that got me connected to an actual IRS agent in less than 2 hours. The agent confirmed what my preparer did was NOT allowed and helped me file a complaint. Talking to a real person at the IRS was literally the only way I got my missing money back.

THIS IS THE TRUTH!!! I worked at one of those tax prep chains for 2 tax seasons (not naming names but rhymes with Shmiberty Shmax) and they PUSHED us to sell those refund advance products. We got bonuses for each one. Most customers had no idea we were taking an extra $150-200 in fees for basically nothing. It's predatory af and targets low income people who need refunds quickly.

As long as your tax preparer has you sign proper disclosure forms, they CAN process your refund through their system first. It's called a Refund Transfer or Refund Anticipation Check. BUT they MUST disclose all fees upfront. If they didn't have you sign anything or didn't explain fees clearly, that's when it crosses into fraud territory.

I just went thru this mess with my tax preparer! They had my $5700 refund go to them, took out $680 in "fees" when they told me it would be $320, and then ghosted me when I asked for an explanation. I filed a complaint with IRS but felt like it went into a black hole. Anyone know how to actually get results from a complaint? It's been 3 months of waiting.

My sister in law got scammed like this. Her "tax preparer" was just some guy working out of his apartment who said he was a former IRS employee. Took her whole refund ($4700!!!) and gave her $3200 saying the rest was "fees and processing". ALWAYS use legit tax services with proper credentials y'all!

It amazes me that in 2024 people still fall for these scams. DO YOUR OWN TAXES! There are plenty of free or cheap options out there. Why trust random people with your financial info and refund???

one thing that's helped me understand whats actually going on with my refund is taxr.ai which I found on tiktok. Its like having your own tax advisor that can actually explain all the codes and stuff in your transcript. showed me exactly where my refund was and what my preparer was taking out. super easy to use.

idk why people still go to those tax prep places in the mall. most people can file free with irs free file if your income is under $73k. these places prey on low income people who don't know better

PSA: If a tax preparer is taking fees out of your refund without explicit permission, you can report them directly to the IRS using Form 14157. Also make sure your preparer has a valid PTIN (Preparer Tax Identification Number) - you can verify this on the IRS website!

I was having this exact issue and couldn't get answers from the IRS or my tax preparer for WEEKS. Honestly, the only way I finally got clarity was using taxr.ai to decode my transcript. Showed me exactly where my refund was being held up and that my preparer had taken out an unauthorized $379 fee. Worth every penny to finally understand what was actually happening instead of just waiting and hoping. https://taxr.ai

After being on hold with the IRS for 3 HOURS yesterday trying to report my tax preparer for exactly this, I hung up in frustration. Any tips for actually reaching a human being at the IRS????

My mom got scammed by one of these "tax professionals" who was just some random dude working out of a UPS store 🤦‍♀️ Took $700 out of her refund for "processing fees" that were never disclosed. She's on a fixed income and really needed that money. These people are vultures preying on the vulnerable.

Side note but this can be EXTRA sketchy with ITIN applications! If someone is helping you get an ITIN and they want your refund to go to them first 🚩🚩🚩 RUN. That's straight up illegal. IRS has a list of authorized Certified Acceptance Agents who are legit.

I worked in finance for 20 years and I'm CONSTANTLY telling people about this scam. Here's what typically happens: 1. Tax preparer offers "instant refund" or "fast cash" options 2. They send your refund to THEIR account first 3. They take out their prep fee, PLUS extra "processing fees" 4. They give you what's left Legit tax pros will either charge you upfront OR clearly explain any fees for refund advances. If they can't give you a clear breakdown of ALL fees in writing, walk away!

Pro tip: Never EVER agree to refund advance loans or refund transfers. Always have your refund direct deposited to YOUR account. If the preparer insists otherwise, find a new preparer!

My sister just had this happen to her. Tax preparer took $550 out of her $3200 refund without permission. We couldn't get anywhere with the IRS until we used a service called claimyr to get through to an actual agent. The woman we spoke to was super helpful and my sister ended up getting most of that money back! Apparently this is happening A LOT this tax season.

ugh been trying to report my tax guy for doing exactly this for THREE WEEKS but can't get through to the IRS. anyone know a secret number or best time to call??

This is such an important warning! I've seen way too many people get taken advantage of by these predatory tax preparers. Here are some red flags everyone should watch out for: • They promise you a bigger refund than other preparers • They ask you to sign blank forms or won't let you review before filing • They charge based on your refund amount rather than complexity of return • They don't have a permanent office location (working out of temporary locations) • They won't provide you with copies of your completed return • They guarantee specific refund amounts before reviewing your documents Always ask for a written fee agreement upfront and make sure your refund goes directly to YOUR bank account. If something feels off, trust your gut and find someone else. Your tax refund is YOUR money - don't let scammers take what belongs to you!