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Rhode Island Attorney General Peter F. Kilmartin Warns Consumers to be Cautious Regarding Tax-Related Issues and Scams

Whether we like it or not, the April 18th deadline, extended from the traditional April 15th deadline, to file our income tax returns is right around the corner, and during these difficult economic times tax season can be very stressful. Attorney General Kilmartin wants to make sure taxpayers aren’t hoodwinked by misleading tax refund promises or Internet scams.

“Unfortunately to some unscrupulous people, ‘tax season’ is ‘open season’ to scam you out of your hard earned money,” said Attorney General Peter Kilmartin. “With taxpayers looking for quick cash, they often fall prey to promises of instant refunds, not realizing those promises can come with high fees and interest rates that cut deep into the amount a taxpayer would receive from the IRS or the state.”

The Attorney General reminded taxpayers that there is no such thing as an "instant" tax refund from the Internal Revenue Service (IRS). So-called "instant" refunds offered by some tax preparers are loans, usually called Refund Anticipation Loans (RALs), which often come with high fees and high interest rates.

While the IRS doesn't hand out "instant refunds," its e-file system coupled with direct deposit can put a refund into your account quickly -- and it doesn't cost anything. Many taxpayers can even qualify for free tax-filing software from the IRS. This year, every taxpayer with a 2010 Adjusted Gross Income (AGI) of $58,000 or less may visit www.IRS.gov to prepare, complete and e-file tax returns at no cost. If the AGI is higher, taxpayers should look at the website for other government-provided assistance programs. In addition, the IRS provides a list of companies and individuals that are authorized to file tax returns electronically.

For consumers who choose to obtain an RAL, they should carefully read any loan documents, especially the fine print, before signing. Any such documents should include:

• Annual percentage rate of the loan • Schedule of all charges and fees • Maturity date of the loan • List of all charges for electronic filing • Date or period within which the loan money will be received • Who is responsible for paying the loan, if it exceeds the actual tax refund minus any interest and fees

With more and more Americans filing tax returns online, inboxes are flooded with offers for free tax preparation software and other online tax refund services. Taxpayers must be extra aware of Internet and email scams that can gain access to confidential financial information.

Be aware of “phantom websites” that mimic the look and feel of legitimate websites. Know the proper web address and extension for secure sites. The IRS website address is www.irs.gov. All government websites end with “.gov.” All secure sites begin with “https,” not “http,” and have a lock in one corner of the webpage.

Consumers who file online through the IRS or a legitimate, secure tax refund website, should be cautious of companies or individuals who claim that they can check on the status of their tax refund for a fee. Consumers can go directly to the IRS website to find that out for free. Simply go to http://www.IRS.gov and click “Where’s My Refund” to check the status of an anticipated refund. No matter if you seek a RAL, file your taxes online, or check the status of your refund, there are some simple rules to live by:

Never give any personal information to someone you don’t know who calls or emails you to offer to help with your taxes.

Be cautious of emails claiming to be from the Internal Revenue Service (IRS) seeking personal information allegedly for the purpose of processing refunds. These types of emails are known as “phishing” attempts. They look official and may include subject lines that read “Refund Notice” or similar misleading phrases. The IRS NEVER sends emails asking for personal information to process refunds.

Be careful with all documents that contain personal financial information or tax related information. Identity thieves know that mailboxes and trash bins often contain sensitive documents, especially during tax season. Make sure to collect your mail regularly and store all tax related documents in a safe place. Shred all documents that contain personal financial information before throwing them away.

If you decide to use a certified public accountant (CPA), make sure that the CPA is licensed with the Rhode Island Department of Business Regulation.

“The best prevention to being taken in by fraudulent practices is education. No matter if it’s tax season or not, it’s important that consumers practice common sense when protecting their identity and their finances,” continued Attorney General Kilmartin.

About the Office of the Attorney General Consumer Protection Unit The Office of the Attorney General Consumer Protection Unit investigates and mediates consumer complaints concerning unfair and unlawful business practices and misleading advertising arising out of alleged violations of the Deceptive Trade Practices Act. If groups of people are victimized by a deceptive trade practice, this office may file in the Superior Court a civil investigative demand, which is a formal investigation. In appropriate cases, a lawsuit to stop the illegal business practice may be initiated.

Apart from carrying out its statutory responsibilities, the Unit also provides information and referral services to the general public. Consumers are directed to the appropriate governmental or private agencies for help in answering specialized questions or resolving disputes, which are not within the Unit's jurisdiction.

The Consumer Protection Unit is available to speak to community groups on how to protect from being a victim of identity theft and other scams. If you believe you are a victim of consumer fraud or abuse, please contact the Consumer Protection Unit by calling 401-274-4400.

Related links

Department or agency: Department of the Attorney General

Online: http://www.riag.ri.gov/

Release date: 02-22-2011

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