With tax season approaching, the Better Business Bureau wants people to be careful when choosing a tax preparer.
The BBB says 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. Each year, people file complaints with BBB about delays in getting refunds. Some tax preparation offices shut down abruptly, prompting complaints.
Not all tax preparers are created equal, so it's important to check a preparer's qualifications.
Some tax preparers may offer to give you a check or debit card rather than wait for the IRS to mail your refund. BBB advises consumers that these are loans - and they could be costly ones. Some are very similar to payday loans and carry interest rates from 50 to 500 percent. Some have hidden administrative fees. If a preparer makes a mistake in calculating your refund, borrowers may have to pay fines and fees, too.
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.
The IRS recently issued warnings about online schemes that can steal taxpayers' identities. Scam emails may say that there's an issue with a refund, that the taxpayer is being audited or that there's a delay in processing the tax return. Links in the emails usually go to a scammer's website, which asks victims to enter Social Security numbers, bank account or credit card information. The site may automatically install viruses or other malicious software on victims' computers.
The IRS doesn't initiate contact with taxpayers by email, and it won't request personal or financial information or inform you of an audit that way. The IRS says taxpayers should suspect identity fraud if they receive a letter from the IRS saying that more than one tax return was filed for them or if the letter states that you received wages from an employer you don't know. Someone may have obtained your Social Security number and used it to file a return in an attempt to get your tax refund before you do.
If you decide to hire a tax preparer, the BBB advises that you:
- Ask for referrals from friends.
- Check credentials.
- 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.
- Check accessibility. You may need to contact your preparer after tax season is over.
- Read the contract: Know what the service will cost, what it covers and whether the cost changes if you have a complicated return.
- 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. But don't forget to sign it.