Filing draws near so you should be careful of tax consIt is tax season, as millions of people will be getting W2s soon and filing their income tax returns. However, customers have to be diligent about who they entrust their returns with. There are plenty of tax scams out there waiting to claim the unwitting as targets. Resource for this article: Watch out for tax scams as filing ap-proaches
If there is free money, it may be a scam
From 2005 to 2009, there was a huge increase in the number of grievances of identity theft linked to scams that involved income tax returns. In 2009, there were 33,774 cons reported, as reported by the IRS. That is a 300 percent increase from 2005. Individuals are effortlessly scammed around tax season with the phrase “free money from the IRS” used quite often. It is the simplest way for some-one to steal your identity.
Might hurt you even more
The Internal Revenue Service is quite good at figuring out when the returns are cons. In fact, the IRS shut down 117,000 income tax returns that had stolen identities by Could of 2011, according to Tampa Bay Online. That means it stopped $582 million in refunds from being stolen. In 2008, the Internal Revenue Service convicted 124 people and gave 142 indictments of the 214 tax preparer fraud investigations that were done. The only problem with all of this is that individuals are responsible for the info that is presented on their returns, according to MSNBC. That means that even if a fraudster is caught and convicted, an individual who was scammed could still end up paying a ton of money in fees to the IRS.
Hallmarks of a scam
There are many things you can watch for to make sure you are not being scammed when doing your tax return. The IRS is only allowed to contact consumers with postal mail, so do not listen to anything said in a call, text or email. You also should avoid any promises from preparers, according to the Consumerist. Steer clear of specific dollar amount promises, because it is impossible to find out what the number will be until after doing a tax return.
Claiming a lot
Be wary of preparers offering a free return, particularly regarding e-filing. According to the Internal Revenue Service, individuals are eligible for free e-filing if they make $57,000 or less. The IRS has a list of preferred tax preparation providers on its website, which contains trusted preparation software and providers like TurboTax and H&R Block.Consumers should also, according to Washington Post, watch out for everyone offering obscure arguments about why everyone would not owe income taxes. Loopholes in the Constitution, off-shore tax havens, etc., are generally defeated in the court-room, and the taxpayer will be on the hook for penalties plus interest.
SourcesDaily FinanceMSNBCWashington PostConsumerist: http://consumerist.com/2010/01/how-to-avoid-tax-preparation-scams.htmlTampa Bay Online: http://www2.tbo.com/news/breaking-news/2011/may/08/MENEWSO3-irs-postal-service-target-tax-refund-frau-ar-205805/IRS e-filing page: http://www.irs.gov/efile/
