This tax season is the first to fully implement the largest tax code reform of the last 30 years. Questions and concerns exist in tax circles about the details and gray areas.
It is a good year to seek professional tax advice even if you have completed returns yourself in the past. In doing so it is important to ask some questions to avoid scams and identity theft.
How fraudulent schemes work
Recently, a Lowell tax preparer was permanently barred from completing tax returns. The Massachusetts Department of Revenue charged that he had created more than $2 million in fraudulent deductions.
It wasn’t just his clients that benefited. He skimmed about $150,000. His scheme involved directing refunds to his account and prepaid debit cards and transferring only what clients expected. He was ordered to pay restitution of $483,000 to the state.
It can be possible to avoid these tax issues by doing some research. Run a search for past disciplinary actions through the Massachusetts Board of Public Accountancy. In addition, look for proof of membership in a professional organization.
Review the complete return before signing and filing
Service charges can indicate potential issues. Avoid any tax preparation firm that charges fees based on a percentage of the refund. Fees should be understandable and tied to the complexity of a return (the number of schedules and forms completed). Never let a preparer route your refund through their account.
Do not sign a return that is not complete. If you have questions, ask your tax preparer to explain your return and why it might differ from last year. Always request a copy of the signed return for your records.
Ask about cybersecurity
Tax preparers are not immune from cyberattacks designed to steal taxpayer identity data. It is always a good idea to ask a tax preparation firm what steps they have taken to protect client data. If they do not seem concerned about the dangers, it might be wise to seek a different tax preparation firm.
This tax season is passing quickly, do not wait until the week before the deadline to start. Do your research and then make a tax appointment as soon as possible to avoid late fees and penalties.