As the W-2 forms start arriving, consumers are searching for help completing their taxes and getting their refunds processed.
Consumers can be lured by the promise of quick and big returns, only to find out later that they were duped.
The Better Business Bureau Serving Eastern Michigan & the Upper Peninsula (BBB) advises you to check your tax preparer's BBB Business Review prior to making an appointment and offers tips to tax payers for avoiding pitfalls in tax preparation.
Each year, consumers file complaints with BBB about delays in getting refunds and about tax preparation offices shutting down abruptly. Some tax preparation companies are open for only a few months every year, and it can be hard to track the preparer down if you run into problems with your return.
Checking BBB Business Reviews first can help consumers make informed decisions on hiring tax professionals and accountants.
The BBB rates companies A-plus to F based on 16 factors, including how long a company has been in business, the number of complaints the business has and how it responds to complaints they do receive.
If you decide to hire a tax preparer, BBB offers some tips and advice:
- Ask for referrals and do your research: Ask friends for referrals, but regardless of how much you trust the referral, check the preparer out with BBB at www.bbb.org or by calling 248.223.9400 before you hire anyone.
- Check credentials. Is the preparer a certified public accountant (CPA), a tax lawyer or an enrolled agent? Does the preparer belong to a professional organization that requires members to adhere to a code of ethics? Are they a BBB Accredited Business that requires the company to comply with its ethical standards?
- Be wary of promises. Until the preparer knows your situation, there is no way to know whether you'll get a refund or how big it will be. Be wary of preparers who promise to beat competitor's refunds or base their fee on a percentage of your refund. Focus instead, on reporting your information accurately.
- Check accessibility. You may need to contact your preparer after tax season is over. Will he or she be available? If so, will they still be in the same location?
- Beware of refund anticipation loans. These are not actual refunds from the IRS and in some cases, are treated as loans that carry high interest rates. Some tax preparers may offer to give you a check or debit card rather than wait for the IRS to mail your refund. These are very similar to payday loans and carry interest rates from 50 to 500 percent and some have hidden administrative fees. In most cases, tax refund anticipation loans give consumers their refund no more than a few days faster than the IRS, which can deposit refunds in the bank in as few as 10 days.
- Read the contract: Know what the service will cost, what it covers and whether the cost changes if you have a complicated return. Will the preparer represent you in case of an audit?
- Check your return: Before you sign the return, read it over to check for mistakes. Ask the preparer to explain anything you don't understand.
- Keep all documents. Retain any receipts or documents used to prepare the tax return. The burden of proof falls on the consumer when an audit occurs. Get copies of any signed documents.
BBB also begins to field complaints this time of year about tax scams including fraudulent use of the IRS name or logo by scammers attempting to gain access to consumers' financial information in order to steal their identity and assets.
The IRS has warned consumers that it does not initiate taxpayer communications through email. Unsolicited email claiming to be from the IRS should be reported to the IRS at email@example.com. Consumers can also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 1-800-366-4484.
BBB Serving Eastern Michigan & the Upper Peninsula is a non-profit organization with the purpose of promoting trust in the marketplace by assisting in the protection of consumers and businesses from fraud and unethical business practices.
In addition to its recognized dispute resolution services, BBB maintains business reviews on the customer service history of more than 90,000 local businesses and provides consumer education materials on numerous topics.