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TDCI: Be Wary of Tax Scams Ahead of April 15 Filing Deadline

Thursday, March 12, 2015 | 06:28am

NASHVILLE – Tennessee Department of Commerce and Insurance (TDCI) Commissioner Julie Mix McPeak warns Tennessee residents to avoid falling prey to scammers and phony tax preparers ahead of the April 15 Tax Day deadline.

“Scammers and fraudulent tax preparers use the rush of tax season to prey on people by using fraudulent practices designed to steal money and personal information,” McPeak said. “Tennesseans should be vigilant in protecting their personal information during this time of the year by educating themselves before hiring someone to prepare their taxes.”

Unfortunately, when a fraudulent tax return is discovered, it’s the taxpayer, not the return preparer, who pays any additional taxes and interest and who may be subject to penalties. The best protection for taxpayers is a simple one: Do your homework.

To help taxpayers, TDCI’s Division of Consumer Affairs is sharing a checklist of questions and resources that taxpayers should consult before hiring a tax preparer.

Be alert to phone scams. Scams come in all shapes and sizes, but one frequent tax season scam involves consumers being targeted by callers claiming to be Internal Revenue Service agents and demanding payment. If consumers refuse to pay, they are threatened with arrest, among other tactics. Remember: The IRS will never call to demand immediate payment nor will the agency call about taxes owed without first mailing a bill.

Check them out. Tax returns can be created by anyone with a Preparer Tax Identification Number. Before hiring someone to prepare your taxes, check your tax preparer’s credentials by using either TDCI’s One Stop license verification database or the Internal Revenue Service’s Directory of Federal Tax Return Preparers to check if your tax preparer has the training and proper licensure. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers for audits, collections and appeals. Ask to see if your tax preparer is a member of a professional organization.

No fees, please. Avoid preparers who base their fees on a percentage of the amount of the refund. Be careful of using tax preparers who claim they can obtain larger refunds than other preparers. Always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a tax preparer’s bank account.

Never sign a blank form.Whether you file tax returns electronically or by paper, never sign a blank tax return. Before signing your return, always review it with your tax preparer and ask questions. Make sure the return is accurate before you sign it.

Paperwork and questions. Good preparers will ask for your receipts and ask you multiple questions in order to determine if you qualify for expenses, deductions and other items. By asking you questions, a good tax preparer is trying to help you avoid penalties, interest or additional taxes.

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