Tax Preparers Conduct Clean Energy Tax Credit Scams For Financial Gain, Industry Group Says

The Internal Revenue Service has warned taxpayers against “unscrupulous” tax preparers carrying out clean energy tax credit scams.

The ruse occurs when tax preparers illegally give taxpayers tax credits to which they are not entitled.

“Unscrupulous (or misinformed) tax preparers may exploit taxpayers for financial gain by charging fees for falsely claiming tax credits,” Tom O’Saben, the National Association of Tax Preparers’ director of tax content and government relations, told Benzinga.

“They might promise larger refunds or reduced tax liabilities, thereby attracting more clients and increasing their
revenue,” he said. “Additionally, they may inappropriately base their fee as a percentage of the refund they are calculating.”

The tax preparers know they may get caught for the scams, but they do it anyway, O’Saben said.

“Some tax preparers might prioritize short-term financial gain over ethical considerations,” he said.

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“By engaging in fraudulent activities, they risk penalties and legal consequences but might still see immediate financial benefits.”

They may also see it as a way to drum up more business, he said.

“Misleading clients about tax credits could lead to repeat business if taxpayers believe they are receiving more substantial refunds or tax benefits through the preparer’s services.”

Taxpayers can steer clear of such scams by checking the IRS website to make sure that tax preparers are following the rules on tax credits and that they adhere to all tax regulations, O’Saben said.

“Select tax preparers with established credentials, such as certified public accountants (CPAs), enrolled agents (EAs), or those affiliated with recognized professional organizations,” he said. “Check their background and reviews if possible.”

Taxpayers should also educate themselves on the eligibility for tax credits and deductions. They should also review their tax returns to make sure they are being filed accurately and legitimately, he said.

By staying vigilant and informed, taxpayers can reduce the risk of falling victim to scams orchestrated by ill-informed or ill-intentioned tax preparers seeking to exploit clean energy tax credits for personal gain.

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