Fort Bliss Monitor

Watch for signs that tax preparer could be fraudulent

BETTER BUSINESS BUREAU

Tax evasion scams, including fraudulent tax return preparation, cost taxpayers billions of dollars every year. The Internal Revenue Service reports that criminal investigations into fraudulent tax return preparers more than doubled in 2002.

Dishonest tax preparers can commit fraud in a number of ways. They can claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Fraudulent preparers also may manipulate income figures to obtain fraudulent tax credits, such as the Earned Income Tax Credit.

Missing the signs that a preparer could be abusive could cause the taxpayer considerable financial problems. Some of the most common signs include:

• Claiming that they can obtain larger refunds then other preparers.

• Basing their fee on a percentage of the amount of the refund. Fees should be based on the complexity of the return, never on the size of the tax savings or refund.

• Claiming they can get you immediate payment of your return. Keep in mind that this is a loan. Fraudulent tax preparers often pad their pockets by giving cash up front at a high interest rate while presenting it as an instant refund from the federal government.

• Refusing to sign the tax return or provide the taxpayer a copy for his or her records. Always make sure that you have something in hand that shows proof of what transpired and you should have a receipt for services rendered.

Taxpayers should be very careful when choosing tax preparers. While most preparers provide good service to their clients, a few unscrupulous tax preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important for taxpayers to know that even if someone else prepares their return, they are ultimately responsible for all the information on the tax return. The Better Business Bureau, along with the IRS, recommend that taxpayers follow these tips when hiring a preparer:

• Get referrals from satisfied clients.

• Ask the preparer about their training, experience and current knowledge of tax law.

• Find out whether the preparer has ever represented taxpayers in an audit, or has ever been denied eligibility to do so.

• Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months or even years after the return has been filed.

• Most importantly, taxpayers should always review their return before signing and ask questions on entries they do not understand, and get a copy of the return for their records.

• Finally, do not ever sign a blank tax form or one filled out in pencil!

Scam alert!
Greg Abbott, Attorney General of Texas and the BETTER BUSINESS BUREAU

‘Unsubscribe’ links can
turn you in to a spammer

Most people are annoyed by the amount of spam e-mails that come through their e-mail accounts on a daily basis. Oftentimes at the end of a message you may be offered an opportunity to "opt-out" of receiving spam messages. Some spam messages provide an "unsubscribe" link that you must click to have your e-mail address removed from their list. Opt-out links are now required by federal law, but spammers have found a way to use the links for their own benefit. Many consumers have discovered that clicking on the unsubscribe link doesn't eliminate them from the senders list at all. According to a recent MSNBC.com article, spammers are starting to sneak special codes into the opt-out link which turns the spam recipient into an unwitting accomplice. The link is actually a clever trick designed to turn the victim's computer into a zombie that can be used to send out more spam. Other variations of the scam places keystroke loggers on the victim's computer, enabling the spammer to collect personal information, including the victim's password or financial information.
Wise consumers know to keep their anti-virus software and firewalls updated. The best solution is to delete any and all spam e-mail.

Consumers at risk from online payday lending

Payday loan companies are now using the Internet to reach borrowers. Online payday loans are marketed through e-mail, online search, paid ads and referrals. Typically, a consumer is required to complete an online application form or fax a completed application that requests personal information, bank account and Social Security numbers and employer information. Borrowers also have to fax copies of a check, a recent bank statement and signed paperwork. The loan is usually direct deposited into the consumer's checking account and the loan payment or the finance charges are electronically withdrawn on the borrower's next payday.

The Consumer Federation of America recently conducted a survey of 100 Internet payday loan sites, which revealed that consumers who borrow money by transmitting personal financial information over the Internet are at high risk.

The survey indicated that lenders automatically renew loans by electronically withdrawing the finance charge from the consumer's checking account every payday. If consumers fail to have enough money in their accounts, both the payday lender and bank will impose insufficient funds fees.

"Internet payday loans are dangerous for cash-strapped consumers," said Jean Ann Fox, CFA's director of consumer protection. "They combine the high costs and collection risks of check-based payday loans with security risk of sending bank account numbers and Social Security numbers over Web links to unknown lenders."

The survey also revealed that only 38 of the 100 sites disclosed the annual interest rates for loans prior to customers completing the application process. The most frequently posted APR was 652 percent followed by 780 percent. Eighteen sites did not post a privacy policy and 28 sites failed to have secure connections on pages that collected personal financial information. Less than half of surveyed lenders provided a physical address or phone number.

To read the full report, go to www.consumerfed.org/Internet_Payday_Lending113004.pdf.



www.bliss.army.mil	Published for the Fort Bliss/El Paso, Texas Community	January 13, 2005

<map name="boxmap-b4"> <area shape="rect" coords="0, 589, 120, 600" href="http://rcm.amazon.com/e/cm/privacy-policy.html?o=1" > <area coords="0,0,10000,10000" href="http://www.amazon.com/exec/obidos/redirect?tag=&creative=92501&camp=8117&link_code=dl1&path=subst/misc/amazon-cobrand-cc/v3/marketing-from-associates-step1.html/ref%3Db1_assoc_29" > </map>	Watch for signs that tax preparer could be fraudulent BETTER BUSINESS BUREAU Tax evasion scams, including fraudulent tax return preparation, cost taxpayers billions of dollars every year. The Internal Revenue Service reports that criminal investigations into fraudulent tax return preparers more than doubled in 2002. Dishonest tax preparers can commit fraud in a number of ways. They can claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Fraudulent preparers also may manipulate income figures to obtain fraudulent tax credits, such as the Earned Income Tax Credit. Missing the signs that a preparer could be abusive could cause the taxpayer considerable financial problems. Some of the most common signs include: • Claiming that they can obtain larger refunds then other preparers. • Basing their fee on a percentage of the amount of the refund. Fees should be based on the complexity of the return, never on the size of the tax savings or refund. • Claiming they can get you immediate payment of your return. Keep in mind that this is a loan. Fraudulent tax preparers often pad their pockets by giving cash up front at a high interest rate while presenting it as an instant refund from the federal government. • Refusing to sign the tax return or provide the taxpayer a copy for his or her records. Always make sure that you have something in hand that shows proof of what transpired and you should have a receipt for services rendered. Taxpayers should be very careful when choosing tax preparers. While most preparers provide good service to their clients, a few unscrupulous tax preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important for taxpayers to know that even if someone else prepares their return, they are ultimately responsible for all the information on the tax return. The Better Business Bureau, along with the IRS, recommend that taxpayers follow these tips when hiring a preparer: • Get referrals from satisfied clients. • Ask the preparer about their training, experience and current knowledge of tax law. • Find out whether the preparer has ever represented taxpayers in an audit, or has ever been denied eligibility to do so. • Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months or even years after the return has been filed. • Most importantly, taxpayers should always review their return before signing and ask questions on entries they do not understand, and get a copy of the return for their records. • Finally, do not ever sign a blank tax form or one filled out in pencil! Scam alert! Greg Abbott, Attorney General of Texas and the BETTER BUSINESS BUREAU ‘Unsubscribe’ links can turn you in to a spammer Most people are annoyed by the amount of spam e-mails that come through their e-mail accounts on a daily basis. Oftentimes at the end of a message you may be offered an opportunity to "opt-out" of receiving spam messages. Some spam messages provide an "unsubscribe" link that you must click to have your e-mail address removed from their list. Opt-out links are now required by federal law, but spammers have found a way to use the links for their own benefit. Many consumers have discovered that clicking on the unsubscribe link doesn't eliminate them from the senders list at all. According to a recent MSNBC.com article, spammers are starting to sneak special codes into the opt-out link which turns the spam recipient into an unwitting accomplice. The link is actually a clever trick designed to turn the victim's computer into a zombie that can be used to send out more spam. Other variations of the scam places keystroke loggers on the victim's computer, enabling the spammer to collect personal information, including the victim's password or financial information. Wise consumers know to keep their anti-virus software and firewalls updated. The best solution is to delete any and all spam e-mail. Consumers at risk from online payday lending Payday loan companies are now using the Internet to reach borrowers. Online payday loans are marketed through e-mail, online search, paid ads and referrals. Typically, a consumer is required to complete an online application form or fax a completed application that requests personal information, bank account and Social Security numbers and employer information. Borrowers also have to fax copies of a check, a recent bank statement and signed paperwork. The loan is usually direct deposited into the consumer's checking account and the loan payment or the finance charges are electronically withdrawn on the borrower's next payday. The Consumer Federation of America recently conducted a survey of 100 Internet payday loan sites, which revealed that consumers who borrow money by transmitting personal financial information over the Internet are at high risk. The survey indicated that lenders automatically renew loans by electronically withdrawing the finance charge from the consumer's checking account every payday. If consumers fail to have enough money in their accounts, both the payday lender and bank will impose insufficient funds fees. "Internet payday loans are dangerous for cash-strapped consumers," said Jean Ann Fox, CFA's director of consumer protection. "They combine the high costs and collection risks of check-based payday loans with security risk of sending bank account numbers and Social Security numbers over Web links to unknown lenders." The survey also revealed that only 38 of the 100 sites disclosed the annual interest rates for loans prior to customers completing the application process. The most frequently posted APR was 652 percent followed by 780 percent. Eighteen sites did not post a privacy policy and 28 sites failed to have secure connections on pages that collected personal financial information. Less than half of surveyed lenders provided a physical address or phone number. To read the full report, go to www.consumerfed.org/Internet_Payday_Lending113004.pdf.