Notes On Consumer Affairs
“But in this world nothing can be certain, except death and taxes.” So goes the popular saying by Benjamin Franklin. Yes, tax season is upon us again. As the April 15 filing deadline looms ever closer, many of us will consider hiring a tax preparer to calculate and file our taxes for us. You are not legally required to hire a preparer, as state and federal taxes can be done at home, and there are several computer programs that you can purchase to assist you. However, should you decide to hire someone to do your taxes, there are several things to keep in mind.a
As always, you should comparison shop when looking for a tax preparer to help ensure that you get the most for your money. Friends and family may be able to offer sound recommendations as well.
The majority of tax preparers run honest, reputable businesses. However, you need to be wary of dishonest operations. Some entities will make inflated claims about their ability to obtain sizeable refunds that never materialize and many charge exorbitant fees. Others will offer illegal deductions. Some fraudsters will claim that the government cannot legally collect income taxes; this argument is false and has never been upheld by a court.
Other scam artists have urged consumers to put their assets in trusts, promising reduced taxable income and additional deductions. Taxpayers should always consult with a trusted professional, such as a financial planner or attorney, before entering into a trust. Remember, if an offer sounds too good to be true, it probably is.
In 2009, as part of the 2009-10 Budget, the Legislature put in place a new program, which I supported, requiring individuals who prepare tax returns for profit to register annually with the State Department of Taxation and Finance. Each registered tax preparer will receive an identification number that must be included, along with his or her signature, on signed tax returns.
Tax preparers are also required to provide their customers with written information regarding tax preparation.
This information must include the preparer’s qualifications and prices, explanations of some of the commonly offered services and industry jargon, and basic information on what a preparer is and is not required to do for a consumer. Tax preparers must also provide you with accurate information about Refund Anticipation Loans (RALs)
RALs are short-term loans that are based on a consumer’s estimated tax return. While these allow taxpayers to obtain cash on short notice, upon receipt of the actual refund the consumer must pay the money back. They often come with very high annualized interest rates and fees. You are not required to take out a RAL. Be patient and you will get your full refund.
If you file electronically, or e-file, you can receive your refund much more quickly than if you submit your return through the mail, and you will not have to pay any interest or fees associated with taking out a RAL.
If you are looking for more information about tax preparers, RALs, e-filing, or any other information related to tax preparation, there are several resources available to assist you. You can contact the Internal Revenue Service site at www.irs.gov or 1-800-829-1040 and the State Department of Taxation and Finance at www.tax.state.ny.us or 1-800-225-5829.
In addition, you can get information about RALs from the New York State Banking Department at http://www. banking.state.ny.us/brral.pdf or by calling 1-877-BANK-NYS.