The yearly exercise of gathering that plethora of papers from the furthermost reaches of the home or office can be extremely daunting. Keeping up with the ever-changing list of real and bogus deductions and how they do or do not apply to you can be equally daunting. Banklady.com feels your pain! We have, therefore, compiled a few suggestions to help you avoid the scam artists and their endless ruse by hiring a trustworthy tax professional who will actually prepare and file your return legally.
Unless you have the good fortune of a personal recommendation from a trusted friend, you will have to take it upon yourself to determine the qualifications, as well as the ethics, of any prospective preparer. Treat it like an employment interview. If the candidate refuses an in-person meeting, is unable to provide references or proof that he has taken the appropriate tax preparation courses, chances are he’s less than legit. Look for the designations of certified public accountant, enrolled agent or tax attorney. These professionals are required to stay current with changes in the tax laws and they are permitted to represent taxpayers before the IRS in audits, collection actions and appeals.
Scam artists and con men are rampant at tax time, ready to swindle unwary victims in all income brackets, claiming that, for a fee, they can get you more deductions and a bigger refund. A forthright tax preparer would never make such claims before reviewing all the facts. If your tax preparer’s fee is based on a percentage of your refund, run like the wind! Reputable professionals charge by the hour or according to the number of forms completed as part of the return and they make these policies clear from the beginning.
Identity theft is a term we’ve heard a lot lately and it rears its ugly head most prominently during tax season. Never sign a blank form and never sign a draft form in pencil. Don’t give your Social Security number to a would-be tax preparer until you have thoroughly checked him out. Some are looking to gain more from you than a tax preparation fee.
In other schemes, a caller or an Internet ad will offer to “un-tax you for $49.95,” claiming that paying taxes is voluntary. The IRS reports that hundreds of people have been taken in by this ruse and later prosecuted for breaking the law. Refund of Social Security taxes is another hoax with absolutely no factual basis. The taxpayer agrees to pay an up-front “paperwork” fee of $100 plus a percentage of the refund. The scammer then disappears with the victim’s hundred bucks and his bogus claim is, of course, denied.
Several years ago, the number one scheme on the IRS’ “Dirty Dozen” list was a scam citing a law that supposedly provided reparation for slavery. Thousands of hopefulAfrican-Americans paid to have these claims filed on their behalf, only to learn there is no such provision in tax law and taxpayers who file these claims can face up to $500 in penalties if they don’t withdraw the claim.
Some taxpayers are led to believe that by transferring assets into trusts or offshore accounts, they can reduce or eliminate taxes. Not so. Such schemes are certain to come under the very close scrutiny of the IRS and prosecution will follow, where appropriate
New to the “Dirty Dozen” list this year is the “Claim of Right” deduction scheme where taxpayers attempt to take a deduction equal to their wages, claiming it as a “necessary expense for the production of income.” There is no basis for such a claim. Proponents have grossly misinterpreted the Internal Revenue Code.
If it sounds as though there is a huge volume of information to process, we’ve only touched the tip of the proverbial iceberg! The good news is that a reputable tax professional can sort it all out for you… and now you know how to find one!
Contact: Banklady.com, your credit source for financial freedom, www.banklady.com
Reference: Internal Revenue Service, www.irs.gov