BBB consumer alert: avoid unethical tax preparers, beware of tax scams rising

BUFFALO, NY - Whether you have filed your taxes already or not, now is the time to be especially guarded against tax scams. Each year the Better Business Bureau receives thousands of complaints from consumers who paid more in filing fees, service charges or extra processing fees they weren’t expecting. For these problems and others, if you’re about to file this year, the BBB advises consumers to make sure you select one of the many reputable tax preparers in our area and not to fall victim to someone unethical. Plus, if you’ve already filed, BBB is issuing an alert to beware of strange communications about your refund that appear to be coming from your bank, the IRS or an unknown solicitation.

“It’s unfortunate but true that despite the fact that many Americans are working for less, and some are struggling to keep their homes, tax preparation scams crop up every year at tax time hoping to take advantage,” said David Polino, Better Business Bureau President. “Tax season can offer relief, providing returns many families are counting on, but it’s also a time when crooks make an extra push to get people to fall for scams, so consumers should hesitate even if the offer sounds great. Especially if the offer sounds great.”

One of the most common tax scams involves phishing – through email, mail, or telemarketing - asking for private information by someone who is impersonating the IRS. They may say that there is a problem with your refund and need your personal and/or financial information to resolve the issue. These phishing attempts bait victims with claims they are owed more money or there’s no money back if they don’t respond. Consumers should know that the IRS does not correspond with the public in this manner.

Unethical tax preparers have been known to skim part of their clients’ refunds, overcharge for services, and attract clients by making promises that are too good to be true. Consumers in Rochester, NY found trouble when filing with Instant Tax Services. Mo Money Taxes in Syracuse, currently rated NR, has not generated complaints in our area, but many other offices across the country experienced refund problems. According to the IRS, federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against dozens of others.

Tax preparers may offer loans that allow you to leave the preparer’s office with a check or debit card rather than wait for the IRS to mail your refund.  The BBB advises consumers to avoid these costly loans, which are very similar to payday loans and carry interest rates from 50 to 500 percent. Some have hidden administrative fees. If a preparer makes a mistake in calculating your refund, borrowers may have to pay fines and fees, too.

In most cases, tax refund anticipation loans only give consumers their refund a few days faster than the IRS, which can direct-deposit your refund in as few as 10 days. 

“Consumers may assume that the loans will be paid off quickly when their refund arrives,” Polino added. “But if the refund is less than the loan, consumers will have to repay the difference, plus fees and fines.”

BBB offers the following tips to help you avoid falling victim to a tax season scam:

Beware of any phishing emails or phone calls that seem to be from the IRS or your bank. Do not give any personal information or click on any links.Contact the IRS or your bank directly if you receive such a correspondence. Ask them if they are trying to get in touch with you. They are not likely to and you should forward them the email you received for them to investigate.Beware of anyone who pressures you to sign up for immediate payment of your refund that involves high interest loan. Consider these options carefully and do not fall prey to high-pressured sales tactics.Beware of those that boast they can get larger refunds than their competitors.Beware of anyone who bases their fee on a percentage of the refund amount, rather than the complexity of the tax return.Check out tax preparers with your BBB first at bbb.org For additional information you can trust or to find a trustworthy tax preparer, start with trust at bbb.org.