Looking for help with your tax return preparation this year? When doing so, the IRS says to be aware of the following: For 2012, paid preparers are required to have a Preparer Tax Identification Number. This shows that they have at least received some training on tax preparation before attempting to prepare yours. CPAs are not required to have this, as they already meet those standards.
RumboughSignals to watch for when you are dealing with an unscrupulous return preparer would include that they: do not sign the return or will not include a Preparer Tax Identification Number on it; do not give you a copy of your tax return; promise larger-than-normal tax refunds; charge a percentage of the refund amount as preparation fee; require you to split the refund to pay the preparation fee; add forms to the return you have never filed before; encourage you to place false information on your return, such as false income, expenses and/or credits; or encourage you to place assets into a trust that will allow zero income taxes on your income.
Also be aware of fliers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation. These have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives. Scammers prey on low-income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone.
The IRS warns all taxpayers to remain vigilant. There are also a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund, but the scammer uses inflated amounts to complete the return for a larger refund they’ll run off with.
Phishing is another scam that is typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure potential victims into providing valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.
The bottom line is that you must be careful in all your financial dealings. Remember, Jesus told us to “be ye therefore wise as serpents, and harmless as doves.”
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.