Tax scams continue as this year’s tax filing deadline looms. Just today, the Illinois Attorney General announced a lawsuit against a Chicago-area tax preparation service for fraud. Costly fees were deducted from consumers’ anticipated tax refunds without their knowledge, as set forth in the office’s press release describing the tax scams:
“To disguise the undisclosed fees that the company takes from consumers’ tax refunds, Madigan alleges Su Familia gave customers fake tax returns showing a lesser tax refund amount. When consumers have discovered this inconsistency and confronted Su Familia, the company has threatened to initiate legal action against the consumers. As a result, customers, many of whom are low-income, do not receive their full tax refund.”
So, what can you watch out for to avoid falling for a tax scam?
(1) Beware of immediate refunds because those often end up being high cost loans.
(2) Ask for upfront disclosure of all fees.
(3) Don’t sign an arbitration agreement. Before you agree to hire the tax preparer, explain you want to opt out of arbitration so you don’t give up your right to sue.
(4) Be careful of online contractual provisions. Don’t sign an agreement electronically until you’ve seen the full contract printed out and given to you in a form you can keep.
There are helpful resources online for consumers. The Center for Economic Progress (http://www.economicprogress.org/) has some tax preparation tips and provides free tax help for certain qualifying individuals and families.
Don’t rush this process to ensure a quick refund. More than likely, a quick refund means you’re losing money you would otherwise be potentially able to obtain.