Tax season scams to avoid

Online Staff Report

As the saying goes, nothing is certain, except death and taxes. However, history shows us another certainty is fraud and scams, and specifically, tax-related frauds and scams.

Tax season is quickly approaching, and the Better Business Bureau (BBB) is encouraging consumers to be extra vigilant to avoid becoming victims of predatory or fraudulent tax-related offers and scams.

Tax scams come in many varieties, including the following:

Tax-related ID theft — The Federal Trade Commission reports that since 2009 tax or wage-related fraud has been the fastest-growing way that identity thieves misuse victim’s information. In 2011, the most recent figures show more than 34,000 cases of tax identity theft were reported. While there are no fool-proof methods to protect your identity consumers should consider the following:

1. Never carry your Social Security card with you.

2. Never give businesses your Social Security number just because they ask for it. Have them explain the need.

3. Protect your personal computer with firewalls and anti-virus software.

4. Never give your personal information to anyone over the phone, mail or the Internet.

Tax relief scams — Consumers who owe back taxes, sometimes out of desperation, readily fall victim to claims from scammers that they can free taxpayers from having to pay the IRS. They claim to be able to settle the debt for pennies on the dollar. These shady businesses and individuals charge exorbitant up-front fees ranging from $3,000 to $25,000. Consumers who are having trouble paying their taxes should consider the following:

1. Contact the IRS or state comptroller. The IRS’s Taxpayer Advocate Service, an independent office within the IRS, offers free help to taxpayers having trouble paying their federal taxes.

2. Taxpayers needing help with state taxes can contact the National Association of State Auditors, Comptrollers, and Treasurers for guidance.

Tax preparer fraud — Taxpayers who use professional tax preparers must do their research to avoid dealing with fly-by-night preparation outfits that appear quickly, hang a shingle, charge outrageous fees, and then disappear. What to watch for the following:

1. Tax preparers who claim they can get larger returns than other preparers.

2. Those who base their fees on a percentage of the amount of the refund.

3. Preparers who ask their clients to sign blank tax forms.

4. Anyone who refuses to provide a preparer tax identification number.

5. Any preparer who refuses to provide a copy of the completed tax return.

Tax season rip-offs are increasingly more common,” said Dennis Horton, director of the Rockford Regional Office of the BBB. “Taxpayers often get in a rush to complete their tax returns either because they expect a hefty refund or they simply want to get it out of the way.”

In either case Horton noted, “For their own protection, they need to be very aware of who they are dealing with and what is being done on their behalf — to avoid losing money unnecessarily — and because ultimately they bear full responsibility for the tax return they submit.”

Jan. 26-30 is Tax Identity Theft Awareness Week. During that week, consumers who need more information about what to do about these scams can contact their state and/or federal offices for additional help.

For more information, visit www.bbb.org.

Posted Jan. 16, 2015

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