Scammers are impersonating tax authorities and threatening consumers over bogus debts
With this year's tax deadline looming and April marking Financial Literacy Month, Attorney General Eric T. Schneiderman today offered New Yorkers tips to avoid falling victim to reported tax prep scams. The A.G. also asked taxpayers to notify his office of any suspected fraudulent schemes designed to steal personal and financial information from consumers.
"Unfortunately, there are scammers who will shamelessly take advantage of vulnerable consumers as they try to file their taxes on time," Schneiderman said. "My office wants to ensure that consumers have the information they need to avoid these scams and report them to the appropriate authorities."
Each year, the office of the attorney general receives complaints from consumers about various tax preparation schemes. This year, the attorney general's office has received numerous complaints about scammers who are impersonating IRS officials and attempting to collect bogus tax debts. The scammers often threaten lawsuits or arrest if consumers fail to turn over money or provide sensitive personal information. Often the scammers claim consumers owe past tax debts and insist consumers pay using a pre-paid credit card. Pre-paid credit cards are generally difficult to trace and that is why many scammers insist that would-be scam victims pay using these products.
In an effort to help New Yorkers avoid tax-themed scams, the attorney general's office offers the following tips:
•The IRS and legitimate government agencies never demand payment by phone;
•If you owe money, you will receive a legitimate notice in writing that identifies the agency and the reason you owe money;
•Do not give out personal information, including your Social Security number or bank account information, to telephone callers;
•Legitimate government organizations will never threaten arrest or deportation for failure to pay a debt;
•Legitimate government agencies will never insist consumers pay a debt only via a pre-paid credit card.
The following suggestions will help consumers file their tax returns safely and keep more of their return:
•If you use a tax-preparation service, use only established and recognizable companies;
•Check the tax preparer's qualifications and history through the Better Business Bureau (www.bbb.org);
•Ask for a written estimate of all fees; avoid those who base their fees on a percentage of your refund;
•Make sure the tax preparer is accessible, even after the April due date;
•Never sign a blank return;
•Review entire return before signing;
•Make sure the preparer signs the tax form and includes a preparer tax identification number (PTIN);
•Consult New York's "Consumer Bill of Rights Regarding Tax Preparers."
Consumers should also beware of refund anticipation loans (RALs) and refund anticipation checks (RACs). RALs are often marketed as "instant" or "24-hour" refunds, but are actually high-cost loans that come with fees and interest that reduce the amount of any refund. New York state's general business law section 372, known as the Consumer Bill of Rights regarding Tax Preparers, requires RALs to be marketed as loans - not refunds. RACs are temporary bank accounts established on behalf of a taxpayer into which a direct-deposit refund can be received -but these also come with fees that will reduce the consumer's refund. The tax preparer must give the consumer a written disclosure that explains:
•Consumers are not required to take out a refund anticipation loan or refund anticipation check in order to receive a tax refund;
•The amount of fees and interest consumers will have to pay for a refund anticipation loan or refund anticipation check;
•The amount consumers will receive after the fees and interest are deducted;
•The annual percentage rate of interest consumers will be charged;
•The amount the refund will be without a refund anticipation loan.
Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds mailed or directly deposited into their own bank accounts.
Consumers may report suspected instances of consumer fraud by calling Schneiderman's office at 1-800-771-7755 or by visiting www.ag.ny.gov.
The attorney general also reminds New Yorkers there are volunteer income tax assistance (VITA) sites where consumers can get their tax returns prepared free of charge. For more information about how to qualify and identify VITA location sites, go to www.irs.gov.
Consumers whose income is $60,000 or less may qualify for FreeFile and can use free tax preparation and e-filing software. Information on free e-filing is available at: www.tax.ny.gov.
Some additional websites with helpful information include:
Internal Revenue Service -www.irs.gov/taxtopics/tc254.html
NYS Consumer Bill of Rights Regarding Tax Preparers - www.tax.ny.gov/pdf/memos/income/m08_7i.pdf
NYC Department of Consumer Affairs - www.nyc.gov/html/dca/html/home/home.shtml
Schneiderman is urging New Yorkers to be vigilant consumers and to report instances of fraud to his office. Consumers who feel they've been victims of any tax preparation scams are urged to file complaints by visiting the office's website or calling 1-800-771-7755. Consumers also can file an online complaint with the U.S. treasury inspector general at http://www.treasury.gov/tigta/contact_report_scam.shtml.