In light of Financial Literacy Month and with this year’s tax deadline quickly approaching, Attorney General Eric Schneiderman offered New Yorkers some advice on how to avoid tax prep scams.
“My office wants to ensure that consumers have the information they need to avoid these scams and report them to the appropriate authorities,” Attorney General Schneiderman said in the release.
The Attorney General's Office has received a high volume of reports of scammers who impersonate IRS officials and attempt to collect bogus tax debts. If a consumer refuses to provide payment or personal information, the scammers might threaten lawsuits or even arrest. These scammers also often insist payment be delivered only by pre-paid credit card as pre-paid cards the most difficult to trace, according to the release.
To combat such schemes, the Attorney General’s Office said New Yorkers should remember:
- The IRS and legitimate government never demand payment over the phone; this includes insisting that consumers pay debt with a pre-paid credit card.
- Legitimate government organizations would never threaten arrest or deportation for failure to pay a debt.
- If a consumer owes money, they will receive an official notice in writing which details the reasons money is owed and what agency is to be paid.
- Personal information, such as a Social Security Number or bank account information, should never be given to telephone callers.
The Attorney General’s Office also warned New Yorkers about misconceptions regarding refund anticipation loans (RALs) and refund anticipation checks (RACs). Despite marketing as “24-hour” or “instant” refunds, RALs are actually high-cost loans; this is why they must be officially classified as loans, according to the Bill of Rights regarding Taxpayers (i.e. New York State’s General Business Law section 372). RACs are temporary bank accounts established on behalf of the consumer that allow a direct-deposit refund to be received. Although RALs and RACs might seem like attractive options, both RALs and RACs include fees which will reduce the overall refund.
To avoid RAL and RAC fees, consumers can file their return electronically and then have refunds mailed directly or direct deposited into their personal bank accounts.
Attorney General Schneiderman’s Office encourages any suspected consumer fraud to be reported to the Office by phone at 1-800-771-7755 or online at www.ag.ny.gov.
The Office also reminded New Yorkers that they may qualify for Volunteer Income Tax Assistance (VITA) sites which will help consumers prep tax returns for free. Qualification information and a list of VITA location sites can be found at www.irs.gov.
Consumers with an income of or below $60,000 may also have access to FreeFile - free tax preparation and e-filing software. More information is available at www.tax.gov.