Can a Tax Preparer Steal Your Money: IRS Complaint and Refund Recovery

Yes, a tax preparer can steal your money, and it happens often enough that the IRS maintains dedicated complaint forms for it. A dishonest preparer already holds your Social Security number, income records, and bank details, so the theft can be as simple as swapping the direct deposit routing number on your return or as elaborate as inflating your refund with fake deductions and skimming the difference. If you think it has happened to you, the response has three parts running in parallel: report the preparer to the IRS on Form 14157 (adding Form 14157-A when refund theft is involved), file a police report, and start a refund trace to recover the money.

How Preparers Take the Money

The most direct method is changing the bank routing and account numbers on your return before it is filed. The refund lands in an account the preparer controls, and you may not notice until weeks later when nothing arrives. A variation uses a temporary account to receive the refund first, deducts hundreds of dollars in undisclosed “processing fees,” and forwards what is left.

Another pattern is ghost preparing. Anyone paid to prepare a federal return must sign it and include their Preparer Tax Identification Number.1Internal Revenue Service. IRS: Don’t Be Victim to a Ghost Tax Return Preparer A ghost preparer refuses to do either, which erases the paper trail linking them to whatever they put on the return. That freedom lets them inflate deductions, invent dependents, or claim credits you do not qualify for, pushing the refund higher and taking a cut before you see the numbers. The Earned Income Tax Credit is a frequent target, since it produces large refunds and the qualifying rules are complex enough to manipulate.2Internal Revenue Service. Transcript Services for Individuals – FAQs

You Are Still Responsible for What Was Filed

This is the part that catches most victims off guard. The person who signs the return bears primary responsibility for its accuracy, so the IRS can assess penalties and interest against you for a fraudulent return even when a preparer put the false information there. The preparer faces their own penalties, and those do not cancel yours.

Speed matters for that reason. The IRS will consider whether you gave the preparer accurate information and whether you had reason to trust their competence when deciding whether to waive penalties.3Internal Revenue Service. Penalty Relief for Reasonable Cause Waiting weakens that argument. The IRS generally treats federal preparer complaints older than three years as not actionable.4Internal Revenue Service. Make a Complaint About a Tax Return Preparer

Confirm the Theft With a Tax Account Transcript

Before you file anything, verify what the IRS actually processed. Request a Tax Account Transcript through your IRS Individual Online Account or by calling 800-908-9946. The transcript shows your filing status, taxable income, payment types, and any changes made after the original return posted.5Internal Revenue Service. Transcript Types for Individuals and Ways to Order Them Transcripts cover the current year and nine prior years online, or the current and three prior years by phone or mail.

Compare it against the copy the preparer gave you. Red flags include a filing status you did not choose, dependents you do not have, income figures that do not match your W-2s or 1099s, and a refund amount larger than what hit your bank account. A gap between the refund the IRS sent and the deposit you received is the clearest sign of a diverted refund.

Evidence to Pull Together

The stronger your paper trail, the faster the complaint moves. Gather:

  • Your copy of the return, paper or electronic, as the preparer delivered it. If they refused to give you one, note that; it is itself a violation.
  • The Tax Account Transcript showing what the IRS actually received.
  • Bank statements documenting what you received versus what the IRS shows it sent.
  • Receipts, canceled checks, or bank records for fees you paid the preparer.
  • Emails, text messages, and any written agreements with the preparer.
  • The preparer’s PTIN, an eight-digit number preceded by “P” in the Paid Preparer section of the return. Its absence is evidence of ghost preparing.6Internal Revenue Service. Frequently Asked Questions: Do I Need a PTIN?

You also need a police report. The IRS Taxpayer Advocate Service instructs fraud victims to contact local police and file a report naming the preparer as a suspect.7Taxpayer Advocate Service. Tax Return Preparer Fraud A copy of that report is a required attachment when you submit your IRS complaint.

File the IRS Complaint

Two forms handle preparer complaints, and which you need depends on what happened.

  • Form 14157 (Complaint: Tax Return Preparer) is the baseline for any allegation of misconduct, including overcharging, incompetence, or failure to sign returns.
  • Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit) is required in addition to Form 14157 when the preparer stole your refund, filed a return without your permission, or altered your return without consent.4Internal Revenue Service. Make a Complaint About a Tax Return Preparer

Both ask for the preparer’s identifying information, the tax years involved, and a description of what went wrong. Form 14157-A goes deeper into the financial details, including the dollar amounts diverted, how the bank routing numbers were changed, and whether you received an IRS notice about the issue.8Internal Revenue Service. Form 14157, Return Preparer Complaint

You can submit the complaint three ways:

  • Online. Form 14157 can be completed and submitted electronically through the IRS website.9Internal Revenue Service. Form 14157
  • Fax to 855-889-7957.
  • Mail to Internal Revenue Service, Attn: Return Preparer Office, 401 W. Peachtree Street NW, Mail Stop 421-D, Atlanta, GA 30308.8Internal Revenue Service. Form 14157, Return Preparer Complaint

If you received an IRS notice or letter about the fraudulent return, follow the instructions in that notice instead; it may direct you to a different address. Include a copy of the notice with your forms.

Get Your Refund Back

Reporting the preparer and recovering your money are separate tracks. Start a refund trace at the same time you file the complaint. If you are single, head of household, or married filing separately, call the IRS Refund Hotline at 800-829-1954 or use the “Where’s My Refund?” tool on IRS.gov. If you filed jointly, complete Form 3911 (Taxpayer Statement Regarding Refund) and mail it in.10Taxpayer Advocate Service. Lost or Stolen Refund

Once the trace is underway, the Bureau of the Fiscal Service at Treasury contacts the financial institution that received the deposit. The process takes roughly six weeks. If the bureau confirms the refund went into an account you did not authorize, you should eventually receive a replacement. If a paper check was forged, the bureau issues a replacement and investigates the forgery. Denied claims come with instructions for appeal.10Taxpayer Advocate Service. Lost or Stolen Refund

Block the Preparer From Doing It Again

Request an Identity Protection PIN from the IRS. An IP PIN is a six-digit number known only to you and the IRS that must appear on any future federal return filed under your Social Security number. Without it, the return is rejected, which locks out a preparer who still has your information.11Internal Revenue Service. Avoid Fraud and Tax-Related Identity Theft With an IP PIN Use the “Get My IP PIN” tool on IRS.gov, available from mid-January through mid-November.

If the preparer holds a professional credential, additional complaints can end their career. These run independently of the IRS complaint.

  • Enrolled agents: The IRS Office of Professional Responsibility handles discipline. Your Form 14157 can trigger review, or you can contact OPR directly.12Internal Revenue Service. Rights and Responsibilities of Practitioners in Circular 230
  • CPAs: File with the state board of accountancy where the CPA is licensed. Verify license status and check prior discipline through CPAVerify.org.
  • Attorneys: Report to the state bar where the attorney is admitted.

If your transcript shows incorrect information on the filed return, talk to a trusted tax professional about whether you should file an amended return on Form 1040-X or wait for the complaint process to correct your account. The right answer depends on the type and severity of the fraud.

Vetting a Preparer Next Time

Most preparer fraud is preventable with a few minutes of checking. The IRS maintains a free searchable directory of credentialed preparers listing attorneys, CPAs, enrolled agents, and Annual Filing Season Program participants.13Internal Revenue Service. Directory of Federal Tax Return Preparers With Credentials and Select Qualifications If someone claims a credential and does not appear in the directory, walk away.

A few more habits screen out the rest:

  • Insist on a signed return with the preparer’s PTIN and a complete copy before filing. Refusal on any of these is disqualifying.
  • Never let fees come out of your refund without a clear written agreement. Any arrangement in which the preparer receives your refund first should come with written fee disclosures.
  • Be skeptical of refund promises. No preparer can guarantee a specific refund amount before reviewing your documents, and guaranteeing one is grounds for the IRS to seek a court injunction against them.14Office of the Law Revision Counsel. 26 USC 7407 – Action to Enjoin Tax Return Preparers
  • Verify credentials independently: CPAs through CPAVerify.org, attorneys through their state bar, enrolled agents through the IRS directory.