Considering you – the taxpayer – are solely responsible for following tax law, you might want to seriously consider doing a background check on your tax preparer. Once you sign your 1040, your tax preparer is off the hook for any mistakes. The Internal Revenue Service will come after you to clear up any messes and pay any fees. It’s often an expensive and stressful situation, but can be entirely avoided by screening your tax preparer.

Here are three solid reasons why you should investigate your tax preparer’s history… and several tips on how to access to that information.

Privilege to Personally Identifying Information (PII)

You can tell a lot about a person from their financial information and that’s precisely why you should background check your tax preparer. When you hand over your personal financial documents, you’re giving your tax preparer unfiltered access into your PII and all sorts of private details of your life, your partners’ life, even your children’s lives. And when you give her/him your businesses’ financial details, your tax preparer has enough information to do some real damage – including tax fraud.

Tax fraud occurs mostly in two ways:

  • Scammers steal your identity and social security number and file a fraudulent tax return.
  • Tax preparers cheat the government by claiming false deductions or they skim money off the top of your return.

This article from states that the US Treasury may be losing a whopping $5 billion a year from fraudulent tax refund claims. This paragraph from a Boston Globe story is shocking. “A US Treasury audit released last September said that “billions of dollars in potentially fraudulent refunds continue to be paid” as a result of identity theft. If the problem is not stopped, the IRS could issue $21 billion in fraudulent refunds in the next five years, according to testimony by the Treasury Department’s inspector general for tax policy, J. Russell George.

Tax preparers can have criminal histories

Certified Public Accountants, tax preparers and tax professionals can be convicted felons but certain crimes, especially financial crimes, can eliminate you from earning a license to practice. Heightened government regulation, enacted in 2012, is supposed to have curbed the amount of illegal tax activity by tax preparers. Now a tax preparer is required to register with the IRS and receive a Preparer Tax Identification Number (PTIN). A federal mandate that required registered preparers to pass a competency exam was overturned in court, but some individual states like Maryland have their own competency tests and laws.

Many states also ask licensing applicants to disclose any felony convictions and explain the nature of the crime. This doesn’t always preclude them from getting licensed, and as this article points out, gives applicants a chance to be honest, straightforward and forthcoming which goes a long way to establishing their current character.


Just because a tax preparer hasn’t been previously convicted of a crime, doesn’t mean they have a clean record when preparing people’s taxes. In some cases, they might be guilty of losing files, filing late, having a poor record of communication, and a host of other bad business practices that you just don’t want to get hassled with. Simple searches of the Better Business Bureau, your state’s Attorney General’s office, and good ‘ole Google can turn up a ton of stuff. For more tips on how to track down a top tax preparer, read this ActiveCare post.

But I’m Not a Background Check Expert…

There are several viable solutions that you can use as an average Joe to background check your tax preparer, but the easiest thing you can start with is conducting an interview. Here’s some questions to ask:

  • Do you have a preparer tax-identification number?
  • What are your credentials?
  • What kinds of clients do you usually work with?
  • Will you file my returns electronically?
  • Can you give me a price quote?
  • Do you provide audit help?
  • Have you ever been background checked before?

If you’re considering working with a private tax preparer, you may want to conduct your own background check. Before you begin this process, though, you NEED to call us at Active Screening. There are heaps of laws that apply to proper background check procedure, and we don’t want you falling into a non-compliance trap that could land you in court later on.

We have skilled investigators with years of experience handling background checks in the financial services industries. 1-800-319-5580 or email us here.

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