A.G. Schneiderman Issues Consumer Alert Warning New Yorkers Of Tax-Season Scams

Scammers Prey On Seniors Or College Students By Impersonating Tax Authorities To Obtain Personal Information

Schneiderman: New Yorkers Trying To File Their Taxes On Time Should Not Have To Worry About Scammers

NEW YORK – With this year’s tax deadline less than one month away, Attorney General Eric T. Schneiderman today offered New Yorkers tips to avoid falling victim to tax-prep scams. The Internal Revenue Service has already received thousands of reports this year of various scams. The Attorney General also asked taxpayers to notify his office of any suspected fraudulent schemes designed to steal personal and financial information from consumers.

“Tax season is stressful enough. New Yorkers trying to file their taxes on time should not also have to worry about being ripped off by tax scammers,” said Attorney General Schneiderman. “Taking advantage of vulnerable people in this tough economy is shameful. That’s why my office is helping to provide New Yorkers with the information they need to make sure they don’t get ripped off by scam artists.” 

The Attorney General’s Office has recently become aware of a specific scam targeting first generation New Yorkers. In one instance, the scammer said he was from the IRS and claimed that the victim owed thousands of dollars in fines for failing to pay taxes on money sent to his wife overseas – something that was not required. The phony caller also demanded the victim’s Social Security number and threatened him with deportation if he failed to pay the fines. Consumers should be wary of any requests for personal information over the phone. Legitimate government agencies will not threaten deportation.

Each year, the Office of the Attorney General receives complaints from consumers about tax preparation schemes. Some scammers prey on seniors or college students by impersonating tax authorities in an attempt to obtain personal information used to steal people’s identities. Others have even gone to the extreme of using “spoofing technology” to make their caller ID numbers come up to look like they are from the IRS.

In an effort to help New Yorkers avoid tax-themed scams, the Attorney General’s Office offered the following tips:

  • The IRS and legitimate government agencies never demand payment by phone;
  • If you owe money, you will receive a legitimate noticein writing that identifies the agency and the reason you owe money;
  • Do not give out personal information, including your Social Security number or bank account information, to telephone callers;
  • Legitimate government organizations will never threaten arrest or deportation for failure to pay a debt.

The following suggestions will help consumers file their tax returns safely:

  • If you use a tax-preparation service, use only established and recognizable companies; 
  • Check the tax preparer's qualifications and history through the Better Business Bureau (www.bbb.org); 
  • Ask for a written estimate of all fees; avoid those who base their fees on a percentage of your refund; 
  • Make sure the tax preparer is accessible, even after the April due date; 
  • Never sign a blank return; 
  • Review entire return before signing; 
  • Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number (PTIN); 
  • Consult New York's “Consumer Bill of Rights Regarding Tax Preparers.” 

Consumers should also beware of refund anticipation loans (RALs) and refund anticipation checks (RACs). RALs are often marketed as "instant" or "24-hour" refunds but are actually high-cost loans that come with fees and interest that reduce the amount of any refund. New York State’s General Business Law section 372 (known as the Consumer Bill of Rights regarding Tax Preparers), requires RALs to be marketed as loans – not refunds. RACs are temporary bank accounts established on behalf of a taxpayer into which a direct-deposit refund can be received –but these also come with fees that will reduce the consumer’s refund. The tax preparer must give the consumer a written disclosure that explains:

  • That consumers are not required to take out a refund anticipation loan or refund anticipation check in order to receive your tax refund.
  • The amount of fees and interest consumers will have to pay for a refund anticipation loan or refund anticipation check.
  • The amount consumers will receive after the fees and interest are deducted. 
  • The annual percentage rate of interest that consumers will be charged. 
  • The amount the refund will be without a refund anticipation loan 

Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds mailed or directly deposited into their own bank accounts.

The Attorney General also reminds New Yorkers that there are Volunteer Income Tax Assistance (VITA) sites where consumers can get their tax returns prepared free of charge. For more information about how to qualify and identify VITA location sites, go to www.irs.gov.

Consumers whose income is $57,000 or less may qualify for FreeFile and can use free tax preparation and e-filing software. Information on free e-filing is available at: www.tax.ny.gov.

Some additional websites with helpful information include:

Internal Revenue Service
www.irs.gov/taxtopics/tc254.html
www.irs.gov/newsroom/article/0,,id=120129,00.html

NYS Consumer Bill of Rights Regarding Tax Preparers
www.tax.ny.gov/pdf/memos/income/m08_7i.pdf

NYC Department of Consumer Affairs
www.nyc.gov/html/dca/html/home/home.shtml

Attorney General Schneiderman is urging New Yorkers to be vigilant consumers and to report instances of fraud to his Office. Consumers who feel they've been victims of any tax preparation scams are urged to file complaints by visiting the Office’s website or calling 1-800-771-7755.

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