Many taxpayers are so anxious to get their tax refunds that they run to a tax preparer as soon as their employer hands them their W-2 form. Better Business Bureau (BBB) advises consumers to check a tax preparer’s BBB Business Review and watch out for pitfalls that trip up taxpayers every year.
“BBB Business Reviews are a great way to check out any business, including accountants and other tax professionals,” said Michelle L. Corey, BBB President and CEO. “We rate companies from A+ to F based on factors such as how long a company has been in business and how it responds to customer complaints.”
Some tax preparation companies are open for only a few months every year, and it can be hard to track the preparer down if you run into problems with your return. Last year, consumers filed 2,710 complaints with BBB about tax preparers, citing delays in getting refunds or difficulty obtaining help from preparers. Some tax preparation offices have shut down abruptly, prompting complaints.
Not all tax preparers are created equal, so it’s important to check a preparer’s qualifications. Ask what certifications they hold and what will happen if the Internal Revenue Service rejects or challenges your return.
Some tax preparers may offer to give you a check or debit card rather than wait for the IRS to mail your refund. BBB advises consumers that these are typically loans — and they could be costly ones. Some are very similar to payday loans and carry interest rates from 50 to 500 percent. Some have hidden administrative fees. If a preparer makes a mistake in calculating your refund, borrowers may have to pay fines and fees, too.
In most cases, tax refund loans give consumers their refund no more than a few days faster than the IRS, which can deposit refunds in your bank in as few as 10 days.
The IRS has issued warnings about online and telephone schemes that can steal taxpayers’ identities. Scam emails may say that there’s an issue with a refund, that the taxpayer is being audited or that there’s a delay in processing the tax return. Links in the emails usually go to a scammer’s website, which asks victims to enter Social Security numbers, bank account or credit card information. The site may automatically install viruses or other malicious software on victims’ computers.
The IRS doesn’t initiate contact with taxpayers by email or phone, and it won’t request personal or financial information or inform you of an audit that way. The IRS says taxpayers should suspect identity fraud if they receive a letter from the IRS saying that more than one tax return was filed for them or if the letter states that you received wages from an employer you don’t know. Someone may have obtained your Social Security number and used it to file a return in an attempt to get your tax refund before you do.
If you decide to hire a tax preparer, the BBB advises that you:
- Ask for referrals from friends, but check the preparer out with the BBB at www.bbb.org or by calling (314) 645-3300 before you hire anyone.
- Check credentials. Is the preparer a certified public accountant (CPA), a tax lawyer or an enrolled agent? Will the preparer sign your return and provide you with a copy? Does the preparer belong to a professional organization that requires members to adhere to a code of ethics?
- Be wary of promises. Until the preparer knows your situation, there is no way to know whether you’ll get a refund or how big it will be.
- Check accessibility. You may need to contact your preparer after tax season is over. Will he or she be available?
- Read the contract: Know what a tax preparation service will cost, what it covers and whether the cost changes if you have a complicated return. Will the preparer represent you in case of an audit?
- Check your return: Before you sign the return, read it over to check for mistakes. Ask the preparer to explain anything you don’t understand. But don’t forget to sign it.
Consumers may obtain BBB Business Reviews by going online to www.bbb.org or by calling (314) 645-3300.