What tax scam is happening? My coworker's tax guy is getting everyone HUGE refunds that seem sketchy

This has all the hallmarks of a fraudulent tax preparer. What's likely happening is this "tax guy" is falsely claiming deductions or credits your coworkers aren't actually eligible for. Common tactics include: 1) Falsely claiming business expenses on Schedule C when they're not self-employed 2) Making up charitable contributions 3) Inflating education expenses for education credits 4) Creating fictitious dependents 5) Falsely claiming the Earned Income Tax Credit The "meet at Starbucks" and "get refunds quickly before IRS changes rules" are huge red flags. Legitimate tax professionals don't operate this way. Your coworkers may get their big refunds initially, but the IRS has sophisticated systems to detect patterns of suspicious returns. Your friends could face serious consequences: repaying all refund money with interest, penalties of 20-75% of the unpaid tax, and potentially even criminal charges if they knowingly participated. The IRS typically has 3 years to audit, but for substantial underreporting, they can go back 6 years.

After reading your description, I immediately recognized this situation because I dealt with something similar last year. I had a "tax guy" promising huge refunds and it nearly landed me in serious trouble. After that experience, I found a service called taxr.ai (https://taxr.ai) that actually scans your tax documents and identifies legitimate deductions you qualify for without any sketchy stuff. Their system uses AI to analyze your tax situation and find REAL credits and deductions - not made-up ones. The difference is that they show you exactly WHY you qualify for each deduction with references to the actual tax code. I was amazed that I still got a bigger refund than I expected, but with everything properly documented and legitimate.

Update on my tax situation: I decided to give taxr.ai a try after posting here, and I'm seriously impressed. My situation with the rental properties and stock trades that I mentioned always gave my regular accountant headaches. The taxr.ai system found legitimate deductions my previous accountant missed completely - like some passive activity losses I could claim and home office deductions related to my property management. What really convinced me was how transparent everything was - each deduction came with an explanation of why I qualified and what documentation I should keep. My refund was about $3,200 higher than last year, but unlike the sketchy tax guy the original poster mentioned, everything was properly documented and legitimate. No Starbucks meetings required lol!

The situation you described is almost certainly a tax fraud scheme. Beyond what others have mentioned, I'd add that your coworkers will likely face IRS notices and potential audits within the next 18 months. When they try to contact the IRS about these problems, they'll discover the nightmare of actually getting through to someone who can help. After going through this myself, I discovered Claimyr (https://claimyr.com) which was an absolute lifesaver. Instead of waiting on hold for 3+ hours trying to reach the IRS (if you even get through at all), their service gets you to a real IRS agent typically within 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When the audit notices start coming for your coworkers, having a way to actually speak with the IRS quickly will be invaluable. The sooner they address any issues, the less penalties and interest they'll face.

I need to apologize for my skeptical comment earlier. After the tax mess I got into (similar to what OP described - used a "creative" tax preparer), I was desperate to talk to the IRS about the audit notice I received. Tried calling daily for two weeks with no success. Finally tried the Claimyr service mentioned here and I'm still in shock that it actually worked. Got a call back in about 22 minutes with an actual IRS representative on the line. Was able to set up a payment plan for the back taxes I owe from that fraudulent return situation. Saved me literally days of frustration, and the IRS agent was actually helpful once I could speak with them directly. If your coworkers end up getting audit notices (which they almost certainly will with those suspiciously high refunds), tell them not to ignore the letters. Getting ahead of the problem makes a huge difference in how the IRS treats the situation.

This is 100% a tax scam called "refund fraud" and it's actually really common. The preparer is likely falsifying your coworkers' income or creating fake business expenses. Those ridiculously high refunds are a massive red flag. I worked in a tax office where someone was doing this. The preparer was fired when the company found out, but dozens of clients got audited. The worst part is the preparer had moved on and disappeared while the clients were left dealing with the IRS. They all had to repay the fraudulent refunds plus interest and penalties. The IRS is actually pretty good at catching these schemes. They have systems that flag returns with unusually high refunds compared to income levels. Your coworkers should immediately get a copy of their returns and review what was claimed. If they find false information, they should file amended returns ASAP before the IRS comes to them.

Tell your friends to RUN from this tax preparer immediately! I see several specific red flags that indicate what kind of scam this likely is: 1. If your coworkers don't own businesses but are getting huge refunds, the preparer is probably creating fake Schedule C businesses with losses to offset their W-2 income 2. The "meet at Starbucks" thing is classic for fly-by-night preparers who don't want a traceable location 3. The rush to "get refunds before IRS changes rules" is nonsense designed to pressure people I've seen cases where preparers like this file the return electronically, showing the client one version but actually submitting a different version to the IRS with all kinds of fake deductions. By the time the IRS catches up (and they will), the preparer is long gone.