Tag Archives: PTIN

Tax Season 2017 -Who’s Doing Your Taxes?

Courtesy of Stuart Miles

Tax season is scam season and the cyber crooks are trying every possible trick to get your money. African-Americans, people of color, senior citizens and immigrants are especially targeted. Why? Because we are not educating ourselves. Tax scams targeting black people in the past included a scheme for slavery reparations. Immigrants are vulnerable because they do not always understand the American tax system and can be easily intimidated with threats of deportation. Seniors are also easily threatened. According to a study by Home Instead Senior Care nearly one in 10 seniors reported being victimized by a phone scam. These scams usually involve someone posing as an IRS official demanding immediate payment of taxes.

Scams, phishing attacks and social engineering are the most common tools used to rip people off. So what can you do? First of all be aware of how the IRS works. Second, be aware of how the crooks work. Simply put, educate yourself. The AACR is here to help

Lets talk about tax preparers. If someone else is doing your taxes there is a a way to find out if this person is legitimate. Check the IRS tax preparer directory. You can search for a tax professional or discover if you are dealing with a crook.

Anyone can claim to be a tax preparer. Only four states have mandated requirements for tax professionals, California, Maryland, New York and Oregon. In all the other states anyone can claim to be a tax preparer and charge for their services. There is no standard or requirement to meet any minimum educational competency or training.

Here are a few tips to spot them.

  • All paid tax preparers are required to have a Preparer Tax Identification Number, or PTIN. The only way to get a PTIN is to register with the IRS.  And the PTIN should be included on your tax return. 
  • Don’t ever sign a partially completed tax return!  A legitimate tax professional will never ask you to do this regardless of how complicated your return may be.
  • Your tax preparer should ask for all documentation of your income. Be suspicious if you are not asked for your W-2 or other documentation of earnings, deductions or credits.
  •  Don’t ever agree to false documentation or deductions. Remember you are ultimately responsible for what is on you tax return. And fines, penalties and even prison is a definite possibility.
  • Your preparation fee should not be based on a percentage of your refund. This may cause a disreputable preparer to inflate deductions or credits.
  • Never pay your taxes or penalties to your preparer. These go directly to the IRS. If they don’t get there its on you.
  • Avoid any tax preparer who claims to have secret method to lower your tax bill that the IRS doesn’t want you to know about.
  • Be alert to all unprofessional behaviors like someone who does taxes from their home or have no set office.
  • Provide only copies of your documents. You keep the originals. 
  • Make sure your preparer is easy to contact and responds promptly.
  • If you spot any of these red flags report the preparer to the IRS using Form 14157. Also file a complaint at Fraud.org.

Tax season is scam season. Educate yourself to the scam, traps and tricks!

Tax Season 2016 – Who’s Doing Your Taxes?

tax-form-1040-fbIf you are not doing your own taxes you better make damn sure the person you pay to do them knows what they are doing!  The tax payer is ultimately responsible for any false claims, evasion or mistakes and you could be looking at criminal charges. This is serious business.

Finding a good tax professional does not have to be hard. You just have to know who you are looking for and that they are fully qualified. There are plenty of well known and reputable companies.  But according to the Government Accounting Office (GAO) most tax mistakes are the result of hiring a tax professional. According to the GAO, taxes prepared by hired professionals had a higher estimated percent of errors, 60 percent, than those prepared by the the tax payer, 50 percent.

The really dangerous thing is that anybody can claim to be a tax preparer. To declare yourself a tax preparer all you need is $50 to buy a tax identification number from the IRS. You don’t need a CPA license or formal education. No questions asked.

So if you’re going to hire a pro you want to choose wisely and the IRS Preparer Directory is where you want to start. The IRS database of tax pros launched about a year ago and includes a listing of tax preparers who have voluntarily submitted their credentials. The database of enrolled agents complete at least 72 hours of tax education every three years. You can search the database here.

Understanding who is doing your taxes is key. You have several choices besides the enrolled agents.

  • Certified public accountants or CPAs are accountants who have qualified through state exams and met specific education and experience requirements for that title. The IRS also offers a list of certified electronic tax preparers. But keep  in mind that not all CPAs area tax professionals. You need to ask and check their credentials.
  • Tax lawyers and tax preparation companies like H&R Block.  Tax attorneys are best for handling complex tax disputes, corporate matters, and handling the tax returns of enormously wealthy people. Unless you have a few million you should be ok with a tax prep company.

But be warned that tax prep companies like H&R Block or Jackson Hewitt and Walmart are designed to complete as many tax returns as quickly as possible. These companies use people who have limited training or are seasonal employees and quality control is suspect. A few years ago when the GAO went undercover to get returns done at these companies, nearly all of the returns were incorrect to some degree. If your tax return is wrong you are still responsible. Some will go with you if you are audited and some will even pay the penalty if there is one. But you are still responsible for any additional taxes or false claims.

One of the safest steps you can take when looking for a tax pro is to interview them. Check their reputation and background with the Better Business Bureau, make sure they have a tax preparer identification number (PTIN) for what it’s worth. Ask;

  • What professional organizations does the preparer belong to?
  • How long have they been doing tax returns?
  • Ask about their educational background.
  • Ask for references and call to find out if the preparer is reliable and professional.
  • Get contact information, address, phone number and email. Get business hours and an after hours contact number if possible. When and how can they be reached is vital. You don’t want someone disappearing with all your tax documents.?
  • Can  they be contacted after April 15th if necessary?
  • What are their rates and how are their fees calculated? For example do they charge by the hour or is there a flat rate per return? Are there additional charges for more complex returns?  You want to make sure you know how much you’ll be paying, including for any phone calls.
  • Do they offer other services such as estate or financial planning?
  • What records and receipts do you need from me? How are they transmitted and secured. Remember your life is in those papers!
  • What happens if my return is audited?
  • Do you offer electronic filing?

Word of mouth is the best advertising so check with friends, relatives, co-workers. Your employer may have a recommended tax preparer. You can find tax professional on places like Yelp, Angie’s List, The American Institute of Certified Public Accountants and National Association of Enrolled Agents website.

Other Tax Season 2016 articles from the African-American Cyber Report

IRS “Get Transcript” Got Hammered!

Tax Prep Apps of the Week

Claim Your Refund ASAP!

Hackers Attack IRS

Beware of Tax Scams