Caution Advised When Choosing an Income Tax Preparer

FOR RELEASE:
IMMEDIATE, Monday
February 25, 2008

New York State Commissioner of Taxation and Finance Robert L. Megna today advised State taxpayers to be cautious of refund scams and fraud when using a preparer for their personal income tax returns.

Commissioner Megna said, “Dishonest preparers lure unsuspecting taxpayers by promising to claim deductions and obtain large refunds that the filers may not be eligible to receive. These claims may be backed by fraudulent documentation".

“Tax filers who need the assistance of a preparer should seek out qualified professionals who have good standing in the community. Honest preparers will ask to see your records and receipts, and question you about your income so they might accurately determine legitimate expenses and deductions,” Commissioner Megna said.

The taxpayer is the responsible party when State Tax Department and Internal Revenue Service (IRS) disallow fraudulent credits or deductions. The taxpayer is responsible not only for the actual tax obligation, but may face additional interest and penalties associated with any outstanding liability.

The State Tax Department and the Consumer Protection Board (CPB) advise those seeking a tax preparer to get references from the preparer's clients; ask ahead about service fees and avoid preparers who guarantee a refund or base their fees on a percentage of the refund; make sure you can contact the preparer after the return is filed; and research the preparer's credentials through the Better Business Bureau, State Bar Association, or licensing authority for CPAs.

Mindy A. Bockstein, Chairperson and Executive Director of the CPB said, “Filing your taxes can be stressful enough without the added burden of dealing with tax preparer fraud. However, according to the IRS, there were approximately 200 investigations related to tax preparation fraud in the last three years, with more than an 80% conviction rate. The New York City Department of Consumer Affairs is currently conducting sweeps of tax preparation companies in the boroughs.

“Therefore, we are urging consumers to pay close attention to the credentials, experience and marketing practices of tax preparers. Consumers should also be on the look-out for potential refund scams where fraudulent e-mails and telemarketers ask for your bank account or credit card number, claiming they will deposit your tax refund in those accounts, only to use the information received to perpetrate identity theft,” Bockstein said.

More than 50 percent of New York tax filers use a paid preparer. Many options exist for taxpayers to prepare their returns properly and with the confidence that the credits and deductions they claim, and the refunds anticipated, are legitimate and correct.

In addition to paid preparers, inexpensive software packages exist helping filers with their returns and listing available credits. The Tax Department also plays a central role in the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs which field teams of trained and dedicated volunteers throughout New York's communities to assist taxpayers in meeting their obligations by filing timely and accurate returns. To find the closest VITA or TCE location, call 1-800-829-1040.

If you suspect a preparer of tax fraud, call the State Tax Department toll-free at 1-888-675-9437 or visit the Department's website at www.nystax.gov.

To file a complaint about this or other consumer issues, call the CPB's toll-free consumer hotline at 1-800-697- 1220 or visit the CPB's website at www.nysconsumer.gov.

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Last Modified: February 26, 2008