Saturday, February 4, 2012
North Dakota Attorney General Wayne Stenehjem`s Consumer Protection and Antitrust Division has offered advice on avoiding Tax scams. Here are some excerpts:
Taxpayers should be very careful when choosing tax preparers. While most preparers provide good service, a few unscrupulous tax preparers file fraudulent tax returns and ultimately defraud their clients. Here are some tips to consider before hiring a tax preparer:
- Get referrals from satisfied clients.
- Ask the preparer about their training, experience, and current knowledge of tax law.
- Find out whether the preparer has ever represented taxpayers in an audit, or has ever been denied eligibility to do so.
- Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months or even years after the return has been filed.
Be sure to watch for any signs that the preparer may be less than honest. Some of the most common signs are:
- Claiming that they can obtain larger refunds than other preparers.
- Basing their fee on a percentage of the amount of the refund. Fees should be based on the complexity of the return, never on the size of the tax savings or refund.
- Claiming they can get you immediate payment of your return. Keep in mind that this is a loan (refund anticipation loan).
- Refusing to sign the tax return or provide a copy for your records. Always make sure you have something in hand that shows proof of what transpired and you should have a receipt for services rendered.
Refund anticipation loans (RAL) have become very popular with consumers, but there are some things you should consider before deciding to take this path. Refund anticipations loans allow you to spend today what you figure the government owes for your income tax refund. More importantly, the fee you pay to get the loan is typically $30 to $125. This fee, if compared to or calculated as "interest," would constitute as much as 500% "interest" per year!
It is important to get a copy for your record once the return is completed and never sign a blank tax form or one that is filled out in pencil.
Here are two basic rules to remember to help you avoid tax scams:
1) The IRS never sends unsolicited e-mails.
2) The IRS never requests passwords, PINs, or other secret access information for bank or credit card accounts.