With just a few weeks to go before Tax Day, it seems that tax scams aren’t slowing down. A Jacksonville, FL, news station has reported the arrest of George Graycochea on a charge of organized fraud.
Graycochea allegedly advertised on Craigslist for tax preparation services. Since I’ve never seen any ads on Craigslist for tax prep, I popped over to check it out. Yep, there’s quite a number of them “as low as $75” ($50 for “IRS audits”), many without addresses and asking, instead, that you contact them by email. My favorite advised that you might be you “allegeable to get FULL TAX REFUND PLUS EXTRA MONEY.” Despite my eye rolls, apparently these ads are successful in attracting taxpayers.
One such taxpayer was Charles Smith who said he thought the tax preparer he found on the site seemed legitimate. Smith paid him for the return and waited for his tax refund, which Graycochea advised would be $1,000. His $1,000 would never arrive. Instead, Graycochea intercepted the refund – in the form of a TurboTax credit card – and used it for himself.
Protect yourself from similar scams. When choosing a tax preparer, be smart:
- “Too good to be true” usually is. Don’t be sucked in by promises of huge refunds if you’re not sure that you qualify. And ignore preparers who base their fees on the size of your refund (the IRS has found a disproportionate number of fraudulent preparers use this technique).
- Do your homework. Ask around, including more about the tax preparer’s qualifications. It is absolutely okay (and not insulting) to ask about credentials – if your tax preparer doesn’t want to tell you about his or her training, chances are, there’s a reason.
- Be nosey. Check out what other taxpayers (and friends) have to say about the preparer. You may want to Google the preparer and check out their reputation with the Better Business Bureau (keep in mind that one or two disgruntled taxpayers shouldn’t be indicative of a tax pro’s reputation since those who prepare lots of returns are bound to tick off someone but lots of complaints may be indicative of a pattern).
- Know the rules. If you live in a state like California or Oregon that licenses preparers, ask to see the license. Nationwide, remember that for 2011, all paid tax preparers must have a PTIN from the IRS – that’s a tax ID number that lets you know that the tax preparer has registered with the IRS.
- Don’t be afraid to ask questions. If you get skeptical, follow up right away. This is why I prefer tax preparers that are around more than seasonally – if yours shuts down for the year on April 19, consider finding someone more available.
The bottom line is that when it comes to your finances, don’t be cheap and don’t be foolish. Keep your wits about you and don’t be a victim this tax season.
Great advice, Kelly. Just one other thing. We at the VITA/TCE sites do shut down within a couple of weeks after the filing deadline. But the LC for the site leaves his/her phone number for contact by the client if they come a-cropper of the IRS during the off-season. The site gives them our number; and we help them through whatever difficulty they may be having, whether it be an amended return or communication with the IRS in response to a “Dear Taxpayer” letter. We usually forget to tell our clients this (and they’re usually so relieved to get their taxes done that they forget to ask).
This gives me a chance to tell anyone using our services who reads your blog that we ARE there for them if they need us.
Melody