Don’t Be a Victim of a Fraudulent Tax Preparation Service in Los Angeles

March 1, 2013

Every year, when tax time comes around, clever thieves think up new ways to trick well-meaning and innocent people out of their hard-earned money. Some of the scams are as old as the hills, just updated using new technology, and some are truly original.

But armed with a little knowledge and a lot of common sense, you should be able to keep your own financial affairs out of their hands.

Let’s say you are looking for a tax preparation service in Los Angeles. Here are the things to watch out for:

Identity Theft

The first kind of fraud is good old identity theft. According to the IRS, identity theft cases peak during tax time. Someone could file a false tax return using your name and social security number, claiming a refund that will tie up your own properly-filed taxes for months.

You may not even know it has occurred until the IRS contacts you regarding a duplicate return or a return filed citing wages from an unknown employer.

The IRS is working as hard as the criminals to develop programs and security measures that can stop this sort of false filing, but fighting this crime is like fighting a Hydra – every time you chop one head off, two more grow in its place. In 2011, the IRS reported over $1.4 billion in false returns that were successfully averted.

Phishing

Phishing is the process of sending a consumer to a false but legitimate-looking website in order to lure the consumer into entering personal information. Usually a consumer would receive an email, purportedly from the IRS, warning the consumer that he must provide particular information or risk being in violation certain tax codes. The message can be fairly threatening, in order to frighten uninformed individuals into compliance.

Likewise, beware of any unsolicited emails offering rewards or unexpected gains. As opposed to fear from the threats from the IRS, these phishers hope that consumers are motivated by greed, the other great emotion that motivates many financial decisions.

It’s important to remember that the IRS will never send unsolicited email requesting personal information. If you receive any communications like this, you can report them to the IRS by forwarding to phishing@irs.gov.

And never click on a link in such an email, without first verifyImage warning of tax fraud. Red letters spelling out tax fraud.ing that it is a legitimate website. You could open up your computer to all kinds of nasty viruses and other malware, simply by visiting the site.

Avoid The Fraudulent Tax Preparation Service in Los Angeles

Identity theft and phishing scams are present all year long, and not particular to the tax-preparation process. However, another type of fraud is distinctly specific to tax time, and this criminal can take advantage of even the savviest individual.

The tax laws have become so complex that most people do not feel comfortable in calculating their own obligations. In this case, it is perfectly acceptable to consult a tax preparation service in Los Angeles.

Anyone can set up an office and call himself a tax preparer. You should be very careful about who you choose to handle your personal information. But some of these criminals are very clever, and they appear legitimate, so you need to be aware of several clues that might alert you that the person you are engaging is not a legitimate tax preparer:

  1. They offer to base their fee as a percentage of the refund that they obtain for you. This is the first red flag, and it should be HUGE. If the preparer is getting part of your refund, there is an inherent conflict of interest – he will attempt to get you the biggest refund possible, and the way he does so may not be strictly legal.

 

  1. Likewise, a preparer should not be promising upfront that he can get a particular refund for you, or any refund at all. Until he has examined all of your documents, a good tax preparer cannot tell whether or not you will get a refund.

 

  1. A  good preparer, obviously, should not be encouraging you to claim deductions that you know you are not entitled to, and should not be advising you to underreport your income or inflate or exaggerate any of your expenses, in order to increase your refund or decrease your liability.

 

  1. A good preparer will always give you a copy of your return to review before he files. He will also have a PTIN (Preparer Tax Identification Number, which is registered with the IRS and verifiable) and he will sign your return as the paid preparer.

 

With a little investigation and common sense, you can be sure that you don’t become a victim of these criminals. Diligence is always necessary, unfortunately, because criminals are constantly dreaming up new and improved ways to part you from your hard-earned money.