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Tax Scams And Fraud To Avoid

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420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – IRS Scams: Be aware of email scams that use the IRS name or Logo on them. The goal of the scam is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft and steal your money.

The IRS does not send unsolicited emails about a person’s tax account or ask for detailed personal and financial information. The IRS never asks people for their PIN numbers or passwords for their credit card, bank or other financial accounts. The IRS does not conduct audits via email. If they want to contact you, they will send you a written notice in the mail.

If you do receive an email from someone claiming to be the IRS or directing you to an IRS site,

  • Do not reply.
  • Do not open any attachments. Attachments may contain malicious code that will infect your computer.
  • Do not click on any links. If you clicked on links in a suspicious e-mail and entered confidential information, visit the Identity Theft page at the IRS’ website.

All of the web addresses for the official IRS website end with .gov. Don’t be confused or misled by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS government website is www.irs.gov.

Preparer Fraud: Dishonest tax preparers are a big problem. They often advertise a guaranteed refund and charge inflated fees for their services. They will offer you a refund loan for a hefty interest rate. Just wait for your refund.

Be especially careful of anyone wanting to use false information on your return or who wants to increase your deductions. That is illegal. And they will have disappeared by the time you are audited.

If someone else fills out your return you want to be sure their Social Security number and signature is on the return.

You should choose carefully when hiring a tax preparer. No matter who prepares your tax return you are ultimately responsible for its accuracy and for any tax bill that may arise due to a questionable claim.

One more thing:  If you receive a suspicious email that claims to come from the IRS, you can forward that email to a special IRS mailbox, phishing@irs.gov. The IRS will use the information, URLs and links in the suspicious emails you forward to trace the hosting website, and alert authorities to help shut down the fraudulent sites. After you forward the email to the IRS, delete the message.

The following articles are from the IRS’ website use them if you want to -

Ten Things the IRS Wants You to Know About Identity Theft

1. If you receive a letter or notice from the IRS which leads you to believe someone may have fraudulently used your Social Security Number, respond immediately to the name and address or phone number printed on the IRS notice.

2. If you receive a letter from the IRS that indicates more than one tax return was filed for you, this may be a sign that your SSN was used fraudulently.

3. Another sign that you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.

4. The IRS has a department which deals specifically with identity theft issues. The IRS Identity Protection Specialized Unit is available if you have been in contact with the IRS about an identity theft issue and have not achieved a resolution.

5. You can contact the IRS Identity Protection Specialized Unit by calling the Identity Theft Hotline at 800-908-4490, Monday through Friday from 8:00 am to 8:00 pm local time (Alaska and Hawaii follow Pacific Standard Time).

6. The IRS Identity Protection Specialized Unit is also available if you believe your identity may be at risk of being stolen due to a lost or stolen purse or wallet or due to questionable activity on your credit card or your credit report.

7. The IRS never initiates communication with taxpayers about their tax account through emails. If you receive an email or find a Web site you think is pretending to be the IRS, forward the email or Web site URL to the IRS at phishing@irs.gov.

8. The IRS has many more resources available to help inform taxpayers about identity theft on the IRS Web site at IRS.gov. On IRS.gov you can access information on how to report scams and bogus IRS Web sites. You can also visit the IRS Identity Theft Resource Page, which you can find by typing Identity Theft Resource Page in the search box on the IRS.gov home page.

9. The Federal Trade Commission is also available to assist taxpayers with identity theft issues. You can reach them at 877-ID-THEFT (877-438-4338).

10. Visit OnGuardOnline.gov for protection tips from the federal government and the technology industry.

Read This Before Choosing a Tax Preparer

If you will be paying someone to do your tax return, choose a tax preparer wisely. You are legally responsible for what’s on your tax returns even if they are prepared by someone else. So, it’s important to find a qualified tax professional.

The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and other items.  By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts.

Most tax return preparers are professional, honest and provide excellent service to their clients; you can use the following tips to choose a preparer who will offer the best service for their tax preparation needs.

  • Find out what the service fees are before the return is prepared. Avoid preparers who base their fee on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers.
  • Only use a tax professional that signs your tax return and provides you with a copy for your records.
  • Avoid tax preparers that ask you to sign a blank tax form.
  • Choose a tax preparer that will be around to answer questions after the return has been filed.
  • Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?
  • Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
  • Determine if the preparer’s credentials meet your needs.  Does your state have licensing or registration requirements for paid preparers?  Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney?  If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals.   Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.
  • Before you sign your tax return, review it and ask questions.

You can report suspected tax fraud and abusive tax preparers to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888.  Download Form 3949-A from IRS.gov or order by mail at 800-829-3676.  Where Do You Report Suspected Fraud Activity?

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You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.

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