BBB Warns Consumers to be Wary of Scams During Tax Season

Anchorage, AK. – February 4, 2008 – The tax process can be an intimidating and complicated one. In recent years, the Internal Revenue Service has tried to simplify the process but the number of forms and variety of methods to file can be daunting. Many consumers prefer to hire a tax preparer or use computer tax software to help them prepare their taxes instead of trying to do it all themselves. The local Better Business Bureau warns consumers to be aware of scams from individuals claiming to be calling from the IRS and to be selective when choosing a method for filing taxes.

Recently, the IRS issued a warning regarding a combination telephone and email scam using the IRS name involving proposed advance payment checks. Individuals claiming to be IRS representatives are contacting consumers and requesting social security numbers and other private information, promising to send consumers a rebate, advance payment check, or other refund. Scammers also try to obtain checking account and routing numbers by saying these will be used for direct deposits.

“Many consumers will trust someone who claims to be from the IRS or other government agency,” said Robert Andrew, President and CEO of the BBB serving Alaska, Oregon and Western Washington. “The IRS will never contact a taxpayer to request social security numbers or account numbers, and consumers should be extremely careful when releasing this information to anyone.”

Tax preparers are required to maintain proper licensing in each state they prepare taxes in. In other words, a tax preparer with a business license in Alaska cannot file for an individual who lives and works in Washington unless the preparer is also licensed in Washington.

“Hiring a tax preparer to do the paperwork is very tempting, but consumers need to remember that hiring someone else does not relieve them from the responsibility for the accuracy of the filing,” said Andrew. “Consumers are responsible for their own tax filings, even if someone makes mistakes along the way.”

Computer tax software has developed over the years to become an easy-to-follow interview that guides consumers through the complicated filing process. However, consumers need to know exactly which version of software to buy so that it covers all of their needs. Intuit’s TurboTax software comes in Basic, Deluxe, and Home & Business editions while H&R Block makes TaxCut in Premium and Home & Business editions. Both companies also offer methods to file your taxes online using products they offer through their Web sites.

Here are some tips to consider to avoid scams and to help you choose how to file your taxes this year:

• Check your tax preparer’s licensing. Many tax preparers do not have the proper business licensing. Make sure the tax preparer you intend to use is properly licensed by calling the Alaska Business Licensing Program at 907-269-8173 or email them at license@alaska.gov. You can also refer to state of Alaska’s Business License website: http://www.commerce.state.ak.us/occ/search1.htm.
• Choose the method that makes you feel the most comfortable. If you feel unsure of filing taxes yourself, locating a reliable tax preparer may be more appropriate. If you like to take control of your own taxes, using a software package or filing online may fit you better.
• Make sure you buy the right software package. Several companies sell computer software to help consumers file their taxes. However, consumers need to select the right package, especially if they have special needs like owning a business, renting property, or being self-employed.
• Protect yourself from identity theft. Identity thieves use a victim’s personal data to gain access to financial accounts and run up charges on credit cards, apply for new loans and credit cards, and even file fraudulent tax returns. Make sure you choose a tax preparer that you trust before handing over pages of documents filled with personal data.
• Consult your local BBB. Go to www.bbb.org to get a free reliability report on a tax preparer. The Better Business Bureau’s reliability reports provide valuable information on companies.

About the BBB serving Alaska, Oregon, and Western Washington:

Your Better Business Bureau is a not-for-profit organization funded by BBB accredited businesses. The mission of the BBB is to promote the highest ethical marketplace relationship between businesses and consumers through self-regulation, education, and information. For more information about the services and products provided by your BBB, call 907-562-0704 in Alaska, 206-431-2222 or 253-830-2924 in Washington, 503-212-3022 in Oregon or visit our Web site at www.bbb.org.