Yes, tax preparers can and do steal refunds, and it happens more often than most people realize

A tax preparer can take money from your refund without your knowledge or consent. The most common method is refund theft: the preparer files your return correctly, but diverts the refund to their own bank account instead of yours. This happens because the IRS sends refunds to whatever bank account is listed on the return—and if your preparer controls that information, they control where the money goes.

Another method is inflating deductions or credits to create a larger refund than you're actually owed, then splitting the difference with you or keeping the overage. A third is charging you an upfront fee that's supposed to come from your refund, then taking more than agreed. The IRS has documented thousands of these cases, and state licensing boards receive complaints constantly.

The reason this works is straightforward: most people don't check their return before it's filed, don't verify the bank account information, and don't follow up on when the refund arrives. By the time you notice money is missing, weeks or months have passed and the preparer has spent it.

Key Takeaways

  • Tax preparers can redirect your refund to their own bank account if you don't verify the account number on your return before filing.
  • You have the right to see your complete return, including all bank account information, before the preparer files it with the IRS.
  • If your refund is stolen, you can file a complaint with your state's tax preparer licensing board and report the theft to the IRS and local police.
  • The IRS can recover stolen refunds and return them to you, but the process takes months and requires documentation of what you were owed.
  • Choosing a preparer with credentials (CPA, Enrolled Agent, or tax attorney) and checking references reduces risk, though it does not eliminate it.

How the theft actually happens: the mechanics

When you file a tax return, you specify a bank account where the IRS should deposit your refund. This is called direct deposit information. The preparer enters this into the tax software, and it goes to the IRS. If the account number belongs to the preparer instead of you, the refund lands in their account.

Some preparers do this openly—they tell you they'll "hold" your refund as payment for their fee, or that they need your account information to "verify" it. Others do it without telling you at all. They may show you a printed copy of the return with your correct account number, but file a different version electronically with their account substituted. Or they may file the return correctly but then call the IRS later, claim to be you, and request a change of address or account number.

A second theft method is creating false deductions. A preparer might claim you donated $5,000 to charity when you didn't, or that you paid $8,000 in student loan interest when you paid $2,000. This inflates your refund. You get some of the extra money, the preparer keeps the rest, and the return is fraudulent—which means you're liable if the IRS audits it.

What to check before your return is filed

You have a legal right to review your complete return before it's filed. This means seeing every page, every number, and every piece of information the preparer entered. Do not sign anything you haven't read.

Specifically, verify these items:

  • Bank account number for direct deposit. Make sure it's your account, not the preparer's. If you don't have a bank account, ask the preparer to explain why they're suggesting one. Some preparers push refund cards (prepaid debit cards) because they earn a commission on them.
  • Deductions and credits. If the preparer claims you donated $5,000 to charity, you should know it. If they claim education credits, you should have receipts or 1098-T forms. Ask them to show you the source of every number over $500.
  • Income figures. These should match your W-2s, 1099s, and other income documents. If they don't, ask why.
  • Your name, address, and Social Security number. Errors here can delay your refund or send it to the wrong place.
  • The preparer's signature and PTIN. A PTIN is a Preparer Tax Identification Number. Every paid preparer must have one and must sign the return. If there's no signature or PTIN, the return is not valid.

If something doesn't match your records or you don't understand it, ask the preparer to explain it in writing before you sign. If they refuse or become defensive, do not sign. Take your documents elsewhere.

What to do if you suspect your refund was stolen

If your refund doesn't arrive when expected, or arrives in a smaller amount than you calculated, take these steps in order:

  1. Check the IRS website. Go to irs.gov and use the "Where's My Refund?" tool. Enter your Social Security number, filing status, and the refund amount you expect. This tells you whether the IRS has processed your return and where your refund was sent. If it shows a different bank account than yours, your preparer likely stole it.
  2. Contact your preparer. Call or email and ask where your refund was sent. Keep a record of the date and time. If they claim they don't know, or give you a different account number than what you provided, document that.
  3. File a complaint with your state's tax preparer licensing board. Most states have a board that oversees tax preparers. Search "[your state] tax preparer licensing board" or "[your state] tax preparer complaint." You'll file a written complaint describing what happened, when, and what evidence you have. Include copies of your documents, emails, and the preparer's contact information. This triggers an investigation.
  4. Report the theft to the IRS. Call the IRS at 1-800-829-1040 and explain that your refund was diverted without your consent. Ask to speak with a representative who handles preparer fraud. You can also file Form 13909 (Complaint: Tax Fraud) with the IRS Criminal Investigation division, though this is for serious cases.
  5. File a police report. Go to your local police department or file a report online through your city or county website. This creates an official record and may help you recover the money. Bring copies of your tax return, bank statements, and any communication with the preparer.
  6. Contact your bank. If the refund was deposited into an account controlled by the preparer, your bank may be able to reverse the transaction if you report it as fraud within a certain window (usually 60 days). This is a long shot, but worth trying.

The IRS can recover stolen refunds and return them to you, but the process takes months. You'll need to prove what you were actually owed (your tax documents) and that the preparer took the money without your consent (your signed return showing your account number, plus the "Where's My Refund?" record showing a different account).

How to choose a preparer who is less likely to steal

Credentials matter, though they're not a may provide. CPAs (Certified Public Accountants), Enrolled Agents (EAs), and tax attorneys are regulated by federal bodies and can lose their licenses for theft or fraud. Tax preparers without credentials are regulated only by state licensing boards, which vary widely in how strictly they enforce rules.

Before hiring a preparer, ask for references from people who have used them for at least three years. Call those references and ask whether the preparer was honest, whether they explained deductions clearly, and whether they were available if questions came up later. Check the IRS's directory of tax professionals at irs.gov/tax-professionals to verify credentials.

Also ask the preparer directly: "Where will my refund be deposited, and can I verify that account number before you file?" A legitimate preparer will welcome this question and show you the information in writing. One who hesitates or becomes evasive is a red flag.

Avoid preparers who offer to "hold" your refund as payment for their fee, or who push you toward refund advance loans or prepaid debit cards. These are not inherently illegal, but they create situations where the preparer controls your money, which increases risk.

What happens to the preparer if caught

If a state licensing board or the IRS finds that a preparer stole a refund, the consequences depend on the amount and the preparer's history. A first-time offender who stole a small amount might lose their license for a year or two. A repeat offender or someone who stole a large amount can face criminal charges, including wire fraud, identity theft, or tax fraud. Prison sentences are possible.

The IRS also imposes penalties on preparers who file fraudulent returns. These can be thousands of dollars per return. If a preparer inflated deductions to create a larger refund, both the preparer and the taxpayer can face penalties and interest, though the IRS may waive penalties for the taxpayer if they can prove they didn't know the return was false.

In practice, many small-time preparer thefts go unpunished because the victim doesn't report them, or reports them late. By the time an investigation starts, the preparer has closed their business and moved on. This is why prevention—checking your return before it's filed—is more reliable than recovery.

Frequently Asked Questions

Can a tax preparer legally take a fee from my refund?

Yes, but only if you agree to it in writing beforehand. The preparer must show you the fee amount and explain how it will be deducted. The refund must still go to your bank account first; the preparer cannot redirect it to themselves. If a preparer takes more than the agreed fee, or takes a fee without your written consent, that's theft.

What if I signed the return but didn't read it carefully?

Your signature means you're responsible for the information on the return, even if you didn't read it. However, if you can prove the preparer changed the return after you signed it, or filed a different version than the one you saw, you have a case for fraud. Keep a copy of everything you signed.

How long does it take to get a stolen refund back?

If you report it to the IRS, expect 3 to 6 months for an investigation and recovery. If you file a police report and the preparer is prosecuted, it can take a year or longer. During this time, you won't have access to the money. This is why prevention is critical.

Can I sue my tax preparer for stealing my refund?

Yes. You can file a civil lawsuit in small claims court (if the amount is under your state's limit, usually $5,000 to $10,000) or in regular court for larger amounts. You'll need to prove the preparer took the money without your consent. Bring your signed return, bank statements, and "Where's My Refund?" records. Many preparers carry malpractice insurance, which may cover the theft.

What if the preparer claims I owe them money and won't give me my refund until I pay?

This is illegal. A preparer cannot hold your refund hostage. If they refuse to release it, report them to your state's licensing board and the IRS when ready. Do not pay them additional money. The refund belongs to you, not the preparer.