Anticipated tax refunds may prompt some consumers to rush to get their taxes filed as soon as possible. However, if you are careless about selecting a tax preparer, it may delay a refund and result in fraud.
The Internal Revenue Service (IRS) estimates 60% of Americans will hire a tax professional to prepare their return. The cost of carelessness can range from high fees and fines to lost time and identity theft.
Regardless of whoever prepares a tax return, the taxpayer is responsible for the accuracy of the paperwork and meeting the filing deadline.
Seasonal preparers, online schemes
Consumers should also be aware that some tax preparation businesses are open for only a few months every year. It may be hard to track down the preparer if there are problems after a tax service office closes.
The IRS also has issued warnings about online tax-related schemes that can steal taxpayers’ identities. For example, scam emails may state there is an issue with a refund, that the taxpayer is being audited, or that there’s a delay in processing the tax return.
Links in the emails usually go to a scammer’s website, which will then ask for Social Security or bank account numbers, or credit card information.
The IRS doesn’t contact taxpayers by email and it won’t request personal or financial information, or inform you of an audit by email either.
Retail tax return preparation franchises offer competent tax service for individuals who need to file a relatively straightforward tax return.
Some tax preparers will be more experienced than others, and you can sometimes find CPAs and enrolled agents working in these offices.
Prices are often determined by how many tax forms need to be filled out.
Tips for the consumer
The Connecticut Better Business Bureau urges consumers to be careful when selecting a preparer and understand how tax-related scams work:
Check the preparer’s qualifications: All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. Paid preparers must sign returns and include their PTIN as required by law. Ask preparers if they belong to a professional organization and attend continuing education classes.
Ask about service fees: Request an estimate of the cost of preparation and whether any additional fees may apply.
Request eFile and direct deposit: Make sure your preparer offers IRS eFile and that any refund due is sent to you or deposited into your bank account. Do not allow a refund to be deposited into a preparer’s bank account.
Check availability: Make sure you’ll be able to contact the tax preparer after you file your return — even after the April 15 due date. This may be helpful in the event questions come up about your tax return.
Verify your return before signing: Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
Watch out for…
Steer clear of any tax preparer who promises you an inflated refund, or charges fees based on the size of your refund, and ensure that all documents are enclosed
You can report abusive tax preparers and suspected tax fraud to the IRS irs.gov or by calling 800-829-3676.
Howard Schwartz is executive communications director for the Connecticut Better Business Bureau, a nonprofit organization. Learn more at www.ct.bbb.org.