Tax filing season opens tomorrow, Jan. 30, therefore, Better Business Bureau of Southern Arizona is warning consumers to beware of a growing crime known as tax preparer fraud.

According to the Internal Revenue Service, tax preparer fraud occurs when a preparer “alters return information without their clients’ knowledge or consent in an attempt to obtain improperly inflated refunds or to divert refunds for their personal benefit.” The taxpayer is usually unaware of the preparer’s actions but is left liable for the discrepancies.

In response to the prevalence of return preparer fraud, here are some of the specific schemes the IRS is warning about:

• Internet solicitations that direct taxpayers to toll-free numbers and then solicit Social Security numbers.
• Homemade flyers and brochures implying credits or refunds are available without proof of eligibility.
• Offers of free money with no documentation required.
• Promises of refunds for “Low Income — No Documents Tax Returns.”

To find a trustworthy professional to help prepare your taxes, BBB offers these tips:

• Get references and do your research. Get referrals from friends and family on who they use and check out the company at www.tucson.bbb.org to see its BBB Business Review.
• Look for credentials. Seek a tax pro who is an enrolled agent, certified public accountant or a tax attorney. These preparers have completed extensive examinations on tax matters and must stay current by meeting continuing professional education requirements. Only CPAs and tax attorneys can represent you in U.S. Tax Court if you are audited.
• Get a firm estimate in writing. The cost of preparing your return will vary depending on the complexity of your information. Before you agree to move forward, present all of your information and get a firm estimate in writing.
• Don’t fall for the promise of big refunds. Be wary of any tax preparation service promising larger refunds than the competition, and avoid tax preparers who base their fee on a percentage of the refund.
• Protect your identity. The IRS has issued several consumer warnings about the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity. The IRS does not initiate taxpayer communications through email. Unsolicited email claiming to be from the IRS, or from an IRS-related component such as the Electronic Federal Tax Payment System (EFTPS), should be reported to the IRS at phishing@irs.gov.

For more information about tax fraud, and other consumer news, visit www.tucson.bbb.org or call (520)888-5353.

Consumers with newly acquired tax refund checks might notice numerous offers and incentives to spend cash right away; Better Business Bureau says to save funds for further review.

According to the Internal Revenue Service, the average 2012 tax refund is roughly $3,000.

BBB warns refund recipients and big spenders to be wary of:

1. Check-cashing businesses that offer special discounts for cashing refunds.
2. “Bring in your tax refund” incentives for deposits or guaranteed credit approval.
3. Conveniently-timed “buy now” advertisements on high-end merchandise, luxury items and other expensive services, such as: furniture; electronics; cars; clothing; jewelry; cosmetic services; and vacations.

“Advertised deals could be exaggerated or misleading. In worst case scenarios, buyers end up in financial hot-water with no recourse for voiding contracts or returning purchases they can’t afford,” says Kim States, BBB President. “In other cases, tax refund checks are lower than anticipated, but consumers have already committed to certain deals or savings plans before knowing exactly how much money they’ll receive.”

After taxes, BBB offers eight smart spending and savings reminders:

• Budget. Wait until returns are received to evaluate how assets will be allocated.
• Spend wisely. Compare deals, review purchase policies and thoroughly research companies before buying.
• Acknowledge asterisks in ads. Make sure to read contracts and fine print carefully. Get verbal promises in writing.
• Track accounts. Make sure deposited checks are applied to accounts. Use credit cards on more expensive merchandise; monitor account activity and contest unauthorized post-transactional charges.
• Dodge debts. Consider using refund cash to cover bills, loans or student expenses.
• Save for safety. Contemplate allocating a portion of the funds in a separate account for unexpected emergency costs.
• Protect purchases. During Financial Literacy Month and year-round, utilize free financial tips and anti-fraud resources at mymoney.gov, consumerfinance.gov,  ftc.gov/moneymatters and saveandinvest.org.
• Capitalize on good credit. Seek free guidance from BBB’s Managing Credit – Made Simpler at bbb.org/credit-management or find articles at www.tucson.bbb.org.

Consumers nationwide, including Tucson, are reporting a new round of phishing email scams using the BBB name and email address. Some of the new emails appear to be targeting accountants.

Consumers report that many of the latest scam emails use a BBB.org email address in conjunction with the American Institute of CPAs logo and name. The message informs recipients that their CPA license is being terminated due to tax fraud allegations and encourages them to click on a link and reply to the charges. The link leads to a third party website that downloads a virus on to the recipient’s computer.

Other scam emails appear to come from a fake BBB employee claiming that the recipient needs to review a complaint that has been filed against them, and advise BBB of their position. From there, the email appears to direct the recipient to the BBB website, but actually directs them to a fraudulent outside link.
This email scam primarily targets accountants, but BBB has received reports of other professionals receiving the emails.

Steps to take:

• Do not reply or click on the link in the email
• Forward fake BBB emails to phishing@council.bbb.org
• Delete the email
• I you clicked on any of the links run a virus scan on your computer

This is the latest iteration in a recent outbreak of scams using the BBB name. For more information about other versions of the scam, please see the following articles:

• Scammers Pick Up the Phone in New Twist on BBB Phishing Scam
• Watch Out for New Wave of Fake BBB.org Emails
• Malicious Complaint Email Claiming It’s From BBB