February 17th, 2014
Tens of millions of Americans, including over 60% of lower-income Earned Income Tax Credit recipients, use paid tax preparers. Yet nearly all states have more regulatory requirements for hairdressers than for tax preparers. Certified public accountants, tax lawyers, enrolled agents credentialed by the IRS, and certain unpaid volunteers are the only tax preparers subject to testing and regulatory oversight. The lack of oversight has led to widespread and endemic problem across the industry. Mystery shopper testing done by the government agencies and consumer advocacy groups over the last several years has revealed a large number of errors, fraud, and other abuses
In addition, high and inflated tax preparation fees of up to $500 for simple returns were documented by mystery shoppers. Accordingly, Bordas & Bordas recommends consumers consider a local certified public accountant as opposed to large tax preparation chains. Often, a more qualified CPA can prepare your return for a similar or even lower price.
Furthermore, Bordas & Bordas recommends filing your taxes early in the tax season as opposed to waiting in order to lower your chances of becoming a victim of identity theft. Stolen identity refund fraud (SIRF) is a growing subset of identity theft, which accounts for up to 43% of identity theft complaints. Similar to any identity theft, a criminal committing tax identity fraud gathers key information about the victim. In the tax context, the key is obtaining the individual's name matched with his or her social security number. The thief then submits a false tax return in the name of the victim claiming a tax refund.
Unfortunately, in many instances the refunds are issued. Cleaning up the mess left behind by the identity thief and getting your refund can take more than a year and countless hours of your time.
One way to prevent this from happening is to file early. Why? The IRS may be able to process your return before the identity thieves can. "It really can be a race to the IRS," said Steve Toporoff, coordinator of the Identity Protection Program at the FTC. "They usually don't have access to W-2 forms, so they just make up income numbers and hope their phony return gets through the process," Toporoff explained. The IRS has published a Taxpayer Guide to Identity Theft
which contains additional tips that you may wish to review.
Don't let tax season be more of a hassle for you than it already is. Find a qualified tax professional and file early.
This article is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the email links contained within the site do not create an attorney-client relationship between Bordas & Bordas and the user or browser.