Tax filing season officially opened on January 31 and BBB is warning consumers to beware of a growing crime known as tax preparer fraud.
According to the Internal Revenue Service, tax preparer fraud occurs when a preparer “alters return information without their clients’ knowledge or consent in an attempt to obtain improperly inflated refunds or to divert refunds for their personal benefit.” The taxpayer is usually unaware of the preparer’s actions but is left liable for the discrepancies.
In response to the prevalence of return preparer fraud, here are some schemes to be cautious of:
• Internet solicitations that direct taxpayers to toll-free numbers and then solicit Social Security numbers.
• Homemade flyers and brochures implying credits or refunds are available without proof of eligibility.
• Offers of free money with no documentation required.
• Promises of refunds for “Low Income — No Documents Tax Returns.” To find a trustworthy professional to help prepare your taxes, BBB offers these tips:
• Get references and do your research. Get referrals from friends and family on who they use and check out the company’s BBB Business Review.
• Look for credentials. Seek a tax pro who is an enrolled agent, certified public accountant or a tax attorney. These preparers have completed extensive examinations on tax matters and must stay current by meeting continuing professional education requirements. Only CPAs and tax attorneys can represent you in U.S. Tax Court if you are audited.
• Get a firm estimate in writing. The cost of preparing your return will vary depending on the complexity of your information. Before you agree to move forward, present all of your information and get a firm estimate in writing.
• Don’t fall for the promise of big refunds. Be wary of any tax preparation service promising larger refunds than the competition, and avoid tax preparers who base their fee on a percentage of the refund.
Always remember to protect your identity. The IRS has issued several consumer warnings about the fraudulent use of the IRS name or logo by scammers trying to gain access to consumers’ financial information in order to steal their identity.
The IRS does not initiate taxpayer communications through email. Unsolicited email claiming to be from the IRS, or from an IRS-related component such as the Electronic Federal Tax Payment System (EFTPS), could be a scam, check into it before opening any links or responding to these emails.
For more information on how to choose a tax preparer, please visit http://www.irs.gov/uac/Newsroom/IRS-Offers-Advice-on-How-to-Choose-a-Tax-Preparer