What Tax Scams to Look Out For
Scammers will try to take advantage of any person in a vulnerable or confused state. That makes tax time an excellent opportunity for crooks who want to take advantage of people who don’t fully understand the tax process and what they can expect from a professional tax preparer. If you see any of these signs, take a closer look to make sure you’re not getting scammed.
Identity Theft Scams
Scammers often use tax season to collect private information that will help them steal identities. Tax forms, after all, ask for a lot of information, including your address, birth date and Social Security number. That’s more than enough for a seasoned crook to open a credit card in your name or find a way to access your bank account.
Luckily, these scams are usually quite easy to recognize.
If a tax preparer or someone from the IRS contacts you via email, then you automatically know that you have been contacted by a scammer. IRS employees will never contact you via email.
Some scammers have even started using text messages to find their victims. Don’t respond to these false ads, alerts or requests and you don’t have to worry about whether that person is just trying to steal your identity.
You should also be wary of advertisements that you get in the mail. Few tax preparers have to send out advertisements to attract business. If you do decide to use a preparer who sent you an ad, refuse to give them information over the phone, computer, or through the mail. Insist on filling out every form at his or her office.
Uncertified Tax Preparers
Professional tax preparers receive training throughout their careers to make sure they understand the latest tax laws.
Unfortunately, a handful of tax preparers are not properly certified to fill out forms or offer advice. They’re just people like everyone else, except that these people want to make a quick buck pretending that they can offer a professional service.
Some of these people might actually know what they are doing. Anyone can read tax code to learn how to prepare a variety of forms for city, state, and federal filing. The person’s ability to do the job, however, is not the point. No matter what service they can offer, they cannot give guarantee you protection from mistakes. If a serious mistake shows up on your taxes, then you are held responsible for it. The so-called tax preparer doesn’t have a thing to worry about.
If you use a professional, though, you don’t have as much liability. That’s one of the things that you pay for when you hire a professional. Hiring someone else to do the job means that you only get a fraction of what you paid for.
You also run the risk of choosing a non-professional who will sell your information to other criminals. As soon as you hand over your tax forms, your information could end up in the hands of identity thieves all over the world.
Avoiding Tax Scams
You can usually avoid tax scams by choosing licensed professionals who have good reputations. Talk to your friends and family members to get advice. They should be able to point you toward tax preparers and accountants who they trust. They should also be able to help you avoid unprofessional tax preparers who will waste your time and money.
The internet can also help you spot scams. Research the name of the accountant to see what kind of feedback you get. If you see a lot of negative comments, then it’s best to stay away.
If you suspect that someone is running a tax scam, you can report them to the IRS.
Simon Zhen is the senior research analyst for MyBankTracker. He is an expert on consumer banking products, bank innovations, and financial technology.
Simon has contributed and/or been quoted in major publications and outlets including Consumer Reports, American Banker, Yahoo Finance, U.S. News – World Report, The Huffington Post, Business Insider, Lifehacker, and AOL.com.