The deadline for filing personal income tax returns is less than a month awayEach year, consumers file thousands of complaints about tax preparation schemes.
Some scammers prey on seniors or college students by impersonating tax authorities, soliciting follow up information on a tax form, and collecting identification numbers and social security information, which is then used to steal people’s money or identities.
Others have used “spoofing technology” to make their caller ID numbers come up to look like they’re from the Internal Revenue Service.
Taxpayers should be watch out for tax preparation businesses that advertise low fees to get the customer in the door, but then increase the final fee by hundreds of dollars claiming the tax return was more complicated than anticipated. Another trick fraudulent tax preparers use is to electronically withdraw more than the agreed on fee without notice to the consumer.
As taxpayers look for help in filing their taxes, New York Attorney General Eric T. Schneiderman offers the following tips for consumers:
- Use recognizable and established companies.
- Check the tax preparer's qualifications.
- Check the tax preparer's history through the Better Business Bureau at www.bbb.org.
- Ask for a written estimate of all fees.
- Avoid those who base their fees on a percentage of your refund.
- Make sure the tax preparer is accessible, even after the April due date.
- Never sign a blank return.
- Review entire return before signing.
- Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number.
- Avoid "too good to be true" promises.
Consumers should also beware of refund anticipation loans or RALs and refund anticipation checks or RACs.
RALs are often marketed as "instant" or "24-hour" refunds but are actually high cost loans that come with fees and interest that reduce the amount of any refund.
RACs are temporary bank accounts established on behalf of a taxpayer into which a direct deposit refund can be received but these also come with fees that will reduce the consumer’s refund.
The tax preparer must give the consumer a written disclosure that explains:
- You aren’t required to take out a refund anticipation loan or refund anticipation check in order to receive your tax refund.
- The amount of fees and interest you’ll have to pay if you take out a refund anticipation loan or refund anticipation check.
- The amount you’ll receive after the fees and interest are deducted.
- The annual percentage rate of interest that you’ll be charged.
- The amount your refund will be if you don’t take out a refund anticipation loan
Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds either mailed or directly deposited in their own bank account.
Check with your local library to see if there are any groups in your area that offer free income preparation assistance for older adults.