No, No, No…forget the popcorn. There’s no Lee Marvin, Charles Bronson, Jim Brown or Ernest Borgnine here. The attached piece was issued by the Internal Revenue Service, on it’s “www.irs.gov” web site. The Dirty Dozen List is linked as follows: http://www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013.
Such Tax Scams have been going on for years, and I have listed some things (below), which are perfectly legal; but, might not necessarily be in your best interest. Remember, they might cost you:
1. Incompetent Tax Preparers. Those store fronts (like the ones that pop-up at the Malls, selling cheese baskets, just for a month or so before the Holidays) are temporary, and, perhaps, they have someone standing outside, dressed as Lady Liberty or Uncle Sam. Most people don’t really know what questions to ask in order to determine whether such preparers are legitimate, or not.
2. Others might offer immediate cash for your refund. These are basically loans. Be careful, the interest rates could be higher than high. Perhaps they make their money on the refund scheme.
3. Others might harass you to establish an IRA. Something that you might always have wanted to do. Watch out (again), the fees could be way out of line. And, of what value would be their advice? Paying high fees to go into a money market fund? Ridiculous!
4. Pay-Day Loans? Again, forget it.
5. Ask them how the Firm–and the person you are dealing with–are compensated. Look closely: you might see them squirm.
Lastly, the points that I have cited may basically be legal; however, they may be dumb and, I believe, only offered to make money–for the company offering them. If you are getting advice by someone in a temporary storefront, just ask yourself: What do these people do during the rest of the year?
I know a retired CPA who, when he first retired, worked part-time at the office of a seemingly reputable tax firm; but, he noticed that he was being asked to suggest options for the refunds (a la “bells and whistles”, as I call them), which had nothing whatsoever to do with tax preparation. This was a well-known tax preparation firm.