Posted on: Thursday, March 19, 2009
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ARE YOU BUYING THIS?
How to guard yourself from tax-related schemes, scams
By
Robbie Dingeman
Advertiser Columnist
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FREE TAX HELP SATURDAY
The Internal Revenue Service and its community partners will offer help on Saturday to people who need free tax preparation, a question answered or a payment schedule arranged. The IRS Taxpayer Assistance Centers in Honolulu and Hilo will be open for "Super Saturday," from 9 a.m. to 2 p.m. to provide free tax help to area residents. Staffers will prepare basic tax returns for those whose income is less than $42,000; work with people having a hard time paying; and provide tax forms and information about e-File, which can speed refunds. The IRS can work with people to set up payment option plans that will prevent even greater penalties and interest. Other Volunteer Income Tax Assistance sites and AARP Tax Aide sites will be open to provide free tax preparation. Locations and hours of operation of Super Saturday sites are available at IRS.gov, keyword Super Saturday. People without computer access can call 800-906-9887 to find a nearby IRS or partner office. IRS customer service telephone lines, 800-829-1040, also will be open on Super Saturday from 6 to 11 a.m., Hawai'i time, to answer tax questions. People who want their tax returns prepared should bring the following information: Valid driver's license or photo identification (self and spouse, if applicable) Social Security cards for all persons listed on the return Dates of birth for all persons listed on the return All income statements: Forms W-2, 1099, Social Security, Unemployment, or other benefits statements, self-employment records and any documents showing taxes withheld Dependent childcare information: payee's name, address and Social Security Number or Taxpayer Identification Number. Proof of account at financial institution for direct debit or deposit (i.e. canceled/voided check or bank statement) Prior year tax return (if available) Any other pertinent documents or papers
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The downturn in the economy means some usually cautious Americans may be more likely to fall for tax-related schemes and scams, prompting warnings from the IRS and consumer advocates.
One O'ahu woman called The Advertiser to say that she got a call from someone identifying herself as being with the IRS, asking for help to expedite a payment to her. As the caller continued to request personal information, the woman got worried and refused to cooperate.
IRS officials said that's the right thing to do, because the IRS would not call and ask for personal information.
Some of these scams come by e-mail or even text message. We received an e-mail that claimed to be from the IRS with official-looking forms asking for personal information that included Social Security numbers. Again, that is information that the IRS would not request in an e-mail and the request was from a scammer.
At the Hawai'i Better Business Bureau, CEO Dwight Kealoha said such scams haven't been widespread in Hawai'i, but crooks are around. "They've become more deliberate," he said.
In addition, he and others figure that there are more people out there who have been victims but are unwilling to report it or talk about it.
With more people losing their jobs — more than 2.6 million jobs were cut in 2008 — taxpayers may be more vulnerable to schemes that promise quick money.
"Consumers can also be certain that where there are taxes there will be tax scams," Kealoha said.
So, Hawai'i's BBB is advising people to be extremely wary of tax-related schemes that will cost them unnecessarily at a time when they can least afford it.
The BBB offers these tips to help people avoid any tax-related scams:
Beware of tax-reduction schemes. Some companies claim that they can help people reduce the amount of money they owe in taxes or government fines. These TV ads might include endorsements from customers who claim they were able to reduce the amount owed to pennies on the dollar. However, some people paid thousands of dollars to such companies and were devastated to learn that the company didn't keep its promise to reduce the amount owed or never even contacted the IRS.
Seek advice from a professional. People who have a tax debt should first seek advice of an IRS-enrolled agent, certified public accountant, or a tax attorney to determine if they qualify to file for an offer in compromise, or some other type of payment arrangement. Another option is to create an installment plan for paying off the debt without the need to pay a middle-man company thousands of dollars.
Be wary of exaggerated claims and upfront fees. If you hire outside help when dealing with the IRS, you should be wary of any claims and upfront fees, and always check out the company's BBB Reliability Report at www.bbb.org.
Say "no" to refund application loans. They are cash advances offered by a tax preparer based on a taxpayer's anticipated refund. That is essentially paying to borrow your own money. Even though the loan is extremely low risk for the tax preparer, the rates can be extremely high for the borrower. The National Consumer Law Center found that the effective annual interest rate for a RAL can range from about 50 percent to nearly 500 percent.
File taxes online. The fastest and most secure way for taxpayers to get their refund is to file online and then allow a direct deposit of the refund into their bank account. Taxpayers can have the money in eight to 15 days.
Beware of "phishing" e-mails. These usually tell the recipient that there's an issue with their refund, that they are being audited or that there is a problem processing their taxes. It often includes a link to a Web site set up by the scammers, where victims are asked to enter their Social Security, bank account or credit card numbers.
Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.
