Articles Posted in Department of Business Affairs and Consumer Protection

tax-prep-fraudWhen you see a tv commercial for a paid tax preparation service that seems too good to be true, that may well be because it is too good to be true. Every year about this time, we are inundated with a tsunami of businesses that offer to ease the pain of tax season by guiding us through the fiscal anxiety season safely. Unfortunately, there is no shortage among them of predatory faux accounting firms whose real profession is to rip off people who are intimidated or overwhelmed by the tax filing process. Often backed by slick marketing and intense advertising, these “independent” tax preparers use hidden charges and add-on services to jack up prices for services that are unnecessary at best and illusory at worst.

Perhaps the most pervasive set piece of this dodgy business is the combo platter of a Refund Anticipation Loan (RAL) accompanied by the insinuation that Tax Preparer X has some sort of inside track to get you a larger refund. While an RAL may be of benefit to some taxpayers, they are the moral equivalent of a payday loan and generally come with high fees or interest rates. You may even get charged for the pre-paid card that contains your refund advance.

To pick off the low hanging fees, the purveyors of RALs are adept at leveraging taxpayers’ need for cash and the lingering distrust of electronic filing . But while the IRS may well take three to four weeks to send you your tax refund if you file by mail, it takes only a few days to get your refund if you file online.