UNT tax law expert warns of risks when filing federal taxes
Millions of low-income families filing federal taxes this year can expect delays in their refunds due to an IRS crackdown on fraud and identity theft. Tax lawyer Bob Widmer, an adjunct faculty member in the University of North Texas Department of Accounting, can talk about the scope of the problem, what this means for taxpayers and what individuals can do to protect themselves.
Widmer can be reached at Bob@widmerlaw.com.
Why is the IRS taking this step?
“Tax fraud is an enormous issue,” says Widmer, noting that identity thieves may file false returns to collect extra refund money. Additionally, an individual might receive help from a tax return preparer who encourages the client to lie on tax forms, thereby increasing the refund amount for the client and the fee for the company – but exposing the client to IRS penalties.
“Even if someone else completes your tax return, you’re ultimately on the hook for the information filed. If problems arise, you risk being audited, having to face large penalties or having your refund withheld or delayed,” he says.
“This is what everyone out there should be focused on – cleaning up the bad actors,” Widmer adds. “There is a manpower issue at the IRS, and there’s simply not enough personnel to deal with the large amount of potential fraud.”
What are red flags for consumers?
“Never sign a blank return,” Widmer says. “Do not permit your refund check to be sent directly to the preparer or allow it to be deposited into a bank account under their control.”
“Confirm the fees and charges for their services, and be cautious if the fee is based on your refund amount or if they won’t give you a quote in writing,” says Widmer. “Pay attention to their other services. Do they offer electronic filing? Are they available after the April filing deadline? What is their record retention policy for your documents?”
Finally, Widmer says, “always get a preparer to sign the return and include their PTIN.”
What can individuals do if they realize they’ve been victimized?
“If it’s a problem caused by identity theft, report it to police immediately, and monitor your credit card activity and credit score.” he says, adding that it may take the IRS until the next filing season to resolve.
“Bad return preparers need to be reported using IRS Form 14157,” says Widmer, who is also the director of the North Texas Low Income Tax Clinic. The center offers free help to Denton County taxpayers facing daunting tax challenges, and Widmer adds that “the clinic will be happy to assist any taxpayer to report bad preparers.
How can taxpayers find legitimate help?
“There are 200,000 taxpayers in Denton County alone eligible for free tax return preparation through the nationwide Volunteer Income Tax Assistance program. Today only one percent of this population utilizes their free services. We need to increase this number,” Widmer says.
Through the program, IRS-certified volunteers provide free filing help to individuals who generally make $54,000 or less, have disabilities or speak little English.
Additionally, Widmer says taxpayers need to do their homework to find good preparers.
“First, check their qualifications,” he says. “Verify their preparer tax identification number or PTIN, which is required by the IRS, and also verify their professional association affiliations and their education and training. Lastly, check the preparer’s history through the Better Business Bureau and their professional associations.”