Beware of Potential Scams and Promises of Inflated Tax Refunds

New York taxpayers are being warned about the tactics some unscrupulous tax preparers will use to extract more of their hard-earned money now that personal income tax filing season is underway. Consumers should be wary of preparers who offer "instant refunds" or "no up-front cost" for tax preparation. To avoid potential scams, the New York State Tax Department has opened free tax assistance sites, assisting eligible taxpayers with free electronic filing options online and at numerous high-need locations throughout the state.

"I urge all New Yorkers to be extra cautious and wary of the promises made by these dishonest tax preparers," Governor Cuomo said. "Many of these 'too good to be true' offers are just that, masking increased costs and hidden fees that will do nothing to speed up your return."

Be cautious if you hire a tax preparer. Before you hire a tax preparer, you should ensure that he or she is registered with the IRS and New York State. You should also review a list of fees, and make sure the preparer will sign your return. Don't hire a tax preparer who asks you to sign a blank return, and be wary of high interest rates if you are offered a loan in advance of your refund.

Examples of tactics used by some dishonest tax preparers can be seen below:

Refund anticipation checks or "refund transfers" involve the use of temporary bank accounts set up by tax preparers to receive the tax refunds due to their clients. This allows customers to pay for tax preparation services out of their refund. Once the tax preparer fees are deducted from the federal and New York State refund, what's left is then deposited into a bank account the preparer creates or onto a prepaid card.

Refund anticipation loans or "advances" are loans against taxpayers' refunds that may come with additional fees and costs.

Free Tax Assistance Sites

The New York State Department of Tax has opened free tax assistance sites throughout New York State to help eligible taxpayers e-file their income taxes and claim valuable credits. Tax Department experts will be available to assist low and middle-income New Yorkers through the filing process at no charge. A schedule of dates, times, and locations is available here.

Click here for additional information. 

Source: Press Office, Governor Andrew M. Cuomo