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Tuesday, April 12 2016

Have You Filed Your Taxes Yet?

Adapted from Better Business Bureau (BBB) of Central New England, Inc. press releases:

April 19th is the tax deadline for filing in Massachusetts and, even with a few extra days this year, it will be here before you know it.  Taxes can be complicated, boring, and an easy task to shove to the back burner but the BBB of Central New England wants to help consumers get their taxes filed on time and, even if they've already filed, not fall prey to scams.

Last Minute Tips to Help You Complete Your Taxes:

*Taxes can easily be filed online, which will save you time and eliminate the stress of worrying if the form will be received on time.

*Avoid the risk of a tax audit, or delay/reduction of your refund, by double and triple checking all information for accuracy.

*If you are sure you will not be able to make the April 19th filing deadline, file an extension.

*Hire a qualified tax preparer.  Shop around, don't hire just anyone and make sure they'll be able to accommodate you before the filing deadline. You can start with BBB for a list of Accredited Tax Preparers. Be sure to verify a tax preparer's credentials, ask about fees, and find out if they are available after tax season in the event of an issue.  If you're promised a big refund that doesn't seem accurate, or pressured to make quick decisions, it may be best to continue shopping around.

How To Tell If a Phone Call is Actually From the Internal Revenue Service (IRS):

*The IRS will not call you and demand immediate payment or make threats of arrest if you do not immediately comply.  The IRS will always notify you in writing of any owed taxes.

*The IRS will not demand payment through wire transfer or prepaid debit card.

*The IRS will not demand payment without an opportunity for review.  The IRS will always give you the opportunity to appeal or question any amount owed before making a payment.

Be aware that a law was recently passed which now allows private debt collectors to contact citizens that owe taxes but always remember a legitimate debt collector cannot harass or threaten you with immediate action or arrest and must provide written notification of the debt upon request.

What should you do if you receive a suspicious call?

*If you receive a call of a threatening nature alleging that you owe taxes, report it to BBB Scam Tracker and the Treasury Inspector General for Tax Administration.

*Contact the IRS directly if you think you may owe taxes or if you know you do owe taxes.  Do NOT call the number that appeared on your caller ID or one that was supplied by a potential scammer.  The IRS can be reached at 1-800-829-1040.

*Ask the caller to provide an official "validation notice" of money that is owed.  By law, debt collectors are required to provide this information in writing.  If the collector will not provide you with this information, hang up the phone.

*Ask for information from the caller regarding their business contact information (their name, company name, street address, and telephone number).  Do your research to see if the agency is legitimate.  IRS agents are required to provide their badge number if requested.

*Do not give or verify any personal information, such as account or credit card numbers, or provide payment, until you have verified the agency.

Beware of These Common Tax Season Schemes:

*Zero Wages---A taxpayer is told to attach to their return a Form 4852 (Substitute Form W-2) or a "corrected" Form 1099 showing zero or very little wages or other income.  The taxpayer indicates he or she is rebutting information submitted to the IRS by their employer.

*Zero Return---A taxpayer is encouraged to enter all zeros on their income tax filing, or to enter zero income, report their withholding, and then write "nunc pro tunc" (Latin for "now for then") on their return.  The taxpayer is told this will lead the IRS to disregard the original return on which they reported wages and other income.

*Tax Abatement---This scam rests on a faulty interpretation of the Internal Revenue Code and involves the tax filer using Form 843 to request abatement of previously assessed taxes.

*Misuse of Trusts---A taxpayer is encouraged to transfer assets into a trust to reduce income subject to tax deductions for personal expenses and reduced estate or gift taxes.  Be aware that some trusts do not deliver the promised tax benefits and the IRS does examine these arrangements.

*False Arguments---The following are false arguments used by shady promoters and thrown out of court:  the 16th Amendment concerning Congressional power to lay and collect income taxes was never ratified, wages are not income, filing a return and paying taxes are voluntary acts, and being required to file Form 1040 violates the 5th Amendment right against self-incrimination or the 4th Amendment right to privacy.

If You Owe Taxes:

BBB suggests consumers who have a tax debt with the IRS seek the advice of an IRS enrolled agent, Certified Public Accountant (CPA), or a tax attorney to determine if they qualify to file for an offer in compromise or some other type of payment arrangement. Click here for a list of local CPA Accredited Businesses.

While the IRS will work directly with the taxpayer and negotiate an offer in compromise, which essentially reduces the taxpayer's debt, the taxpayer has to demonstrate that he or she is in extreme financial hardship. The Web site, www.irs.gov, has more information on the IRS's rules for an offer in compromise. Another option is to create an installment plan for paying off the debt-which can be set up between the taxpayer and the IRS without the need to pay a company thousands of dollars. If a taxpayer does decide to enlist outside help when dealing with the IRS, he or she should be wary of exaggerated claims and large upfront fees, and always check out the business's BBB Business Review first.

Say No to Refund Anticipation Loans:

A Refund Anticipation Loan (RAL) is a cash advance offered by a tax preparer based on a taxpayer's anticipated refund.  Anyone who relies on a RAL is essentially paying to borrow their own money and the loan is extremely low-risk for the tax preparer but interest rates and risks can be extremely high for the borrower.  BBB advises the fastest and most secure way for consumers to get their refund is to file their taxes online and then allow a direct deposit of the refund into their bank account.  That way, taxpayers can have their money in as little as 8 to 15 days. If a consumer absolutely must take out a RAL, shop around before making decisions because rates and restrictions vary by preparer.

Don't Take the Bait on Phishing E-mails

If the IRS has questions or concerns with a tax return, they will not contact you by email.  Phishing e-mails around tax time usually tell the recipient that there's an issue with their refund, that they are being audited, or that there is a problem preventing their taxes from being processed.  In most cases, the fraudulent e-mail will provide a hyperlink directing potential victims to a website set up by the scammers, where victims are asked for Social Security numbers, bank account information, or credit card numbers.  In some cases, these illicit sites are designed to automatically install viruses and malware on the victim's computer.  Many of these scams are run by people operating outside the United States and their e-mails are often rife with spelling and grammatical mistakes.  If you've received a questionable e-mail claiming to come from the IRS, please forward it to phishing@irs.gov.

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For more consumer tips and information visit bbb.org or call 1-866-566-9222 and, for the latest, like us on Facebook or follow us on Twitter.

About Better Business Bureau (BBB) of Central New England
The mission of BBB is to promote and foster the highest ethical relationship between businesses and consumers, through voluntary self-regulation, business and consumer education, and service excellence. For more than 100 years, Better Business Bureau has been connecting consumers to trusted businesses, brands, and charities they can trust. People turn to BBB more than 165 million times last year for BBB Business Reviews on over 4.7 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. BBB of Central New England, Inc. was founded in 1940 and serves 225 communities in Worcester, Hampshire, Hampden, Franklin, and Berkshire counties, as well as parts of Middlesex County, and 7 towns in Connecticut. BBB of Central New England is one of 113 local, independent, BBBs in the United States, Canada, and Mexico.

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