April 10, 2016

As IRS filing deadline approaches, tax scams abound

As the April 18 federal income tax filing deadline approaches, federal officials warned of tax-related scams, including con artist callers pretending to be Internal Revenue Service agents and fraudulent tax return preparers.

"Scam artists and predators are clever in their attempts to swindle taxpayers out of their refunds," said Hawaii Sen. Mazie Hirono during a recent appearance at the Japanese Cultural Center of Hawaii on Oahu. "Kupuna and their families need to remain vigilant and protect themselves as we approach the tax filing deadline."

For example, a Wailuku resident in February said he received a phone call with no caller ID from a person claiming to be from the IRS. In the recorded message, the caller said that the IRS is filing a lawsuit against him and to call a 360 area code (Seattle area) number.

"This is obviously a scam," the Wailuku resident said. "I thought readers might need to know."

The IRS has seen a surge of phone scams as con artists threaten police arrest, license revocation and even deportation, the Hirono news release said.

To report suspected tax scams to the Treasury Inspector General for Tax Administration, go to the websitewww.treasury.gov/tigta/contact_report_scam.shtml.

Meanwhile, the Justice Department warned the public about fraudulent tax return preparers and tax scheme promoters.

Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division cautioned taxpayers to be wary of anyone who guarantees a refund or who claims to sell a sure-fire way to reduce taxes. She also noted that every taxpayer is ultimately responsible for his or her return, even in the case of a scam.

"Taxpayers might think that they're getting a good deal on their taxes, or that as long as someone else prepares the return, they're not responsible. They're wrong," said Ciraolo. "Taxpayers who have their return prepared incorrectly are required to pay the tax they owe or pay back the refund they weren't entitled to get. These clients might also owe interest and penalties, which can be substantial."

Most tax return preparers are honest but "thousands of federal income tax returns are prepared by people who care much more about making a quick buck than about preparing accurate returns," she said.

Ciraolo said that some nefarious preparers charge clients a percentage of their tax refund and intentionally prepare false returns to increase the refund and their fees. Others will charge by the form and intentionally prepare incorrect forms that clients don't need.

Other tips:

* Refunds should never be deposited directly into the preparer's bank account.

* Never sign a blank return or a blank form or sign a return or a form without reading it first.

* Don't use a preparer who mischaracterizes taxpayer's expenses.

* Do not use a preparer who fabricates business expenses or deductions or who claims bogus credits involving the Earned Income Tax Credit, the child care credit or the education credit.

One of the most common dishonest return-preparation practices is to prepare returns that include nonexistent businesses, sometimes based on a client's hobbies. In 2015, federal courts shut down tax return preparers across the country, including one in Kahului.

The federal district court in Hawaii in February 2015 permanently barred James Ericson of Kahului from preparing federal tax returns, the Justice Department said. The complaint against him said that he prepared more than 1,000 tax returns per year and fabricated business schedules, expenses and business income for nonexistent businesses, claimed false or inflated credits and deducted personal expenses that were not legally deductible.

For information on how to report a suspect tax preparer, go towww.irs.gov/tax-profes


The IRS also has a searchable directory of those with a Preparer Tax Identification Number. The directory is intended to help taxpayers with their choice of preparers by providing a listing of preparers in an area who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion. That website is irs.treasury.gov/rpo/rpo.jsf.

Source: Maui News