Tax Season Scams: Attorney General Warns of Misleading Promises and Internet Frauds

Strategic Insights -

As tax season unfolds, Attorney General Peter Kilmartin cautions taxpayers about potential scams and misleading promises from unscrupulous individuals and companies. With the April 18th deadline approaching, unsuspecting taxpayers may fall prey to Refund Anticipation Loans (RALs) and other online tax refund services that promise instant refunds but come with high fees and interest rates. Attorney General Kilmartin reminds taxpayers that the Internal Revenue Service (IRS) does not offer "instant" refunds and that e-filing with direct deposit is the fastest and most secure way to receive refunds.

Key Takeaways:

  • Taxpayers must be cautious of misleading tax refund promises, especially those offering "instant" refunds or claiming to be from the IRS.
  • Refund Anticipation Loans (RALs) are loans with high fees and interest rates, not actual refunds from the IRS.
  • Legitimate tax preparation software and services are available at no cost to taxpayers with 2010 Adjusted Gross Income (AGI) of $58,000 or less.
  • Consumers must be aware of "phantom websites" mimicking legitimate sites, and never give personal information to unknown individuals or companies.
  • The IRS provides free tax-filing software and services for eligible taxpayers, as well as a list of authorized electronic filing companies.
  • Taxpayers should be cautious of companies or individuals claiming to check tax refund status for a fee, and can instead use the IRS website's "Where's My Refund" tool.
  • Shredding sensitive documents and collecting mail regularly can help prevent identity theft.
  • Only licensed certified public accountants (CPAs) can provide tax preparation services, and the Rhode Island Department of Business Regulation can verify licensure.

Statistics:

  • The IRS offers free tax-filing software and services for taxpayers with 2010 Adjusted Gross Income (AGI) of $58,000 or less.
  • At least 30% of tax returns are filed electronically.
  • Identity theft complaints have increased by 47% in the past year.
  • Many online tax refund services charge high fees and interest rates, making it difficult for taxpayers to receive their actual refund amounts.

Sources:

  • Rhode Island Office of the Attorney General
  • Internal Revenue Service (IRS)
  • Rhode Island Department of Business Regulation
  • Deceptive Trade Practices Act