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State warns of tax refund scams

Press release from the Wisconsin Departments of Justice, Revenue and Agriculture, Trade and Consumer Protection (DATCP):

MADISON – Tax season is coming – a time when people receive their W-2 forms, file tax returns and anxiously await tax refunds. Unfortunately, fraudsters also know that people are looking forward to tax refunds and will use that knowledge to steal refunds and trick consumers into giving up personal financial information.

There are many tax preparation services and lenders who will legitimately help consumers file tax returns and obtain refunds. Others, however, may hide their true purpose and get personal financial information under false premises or file a tax return without consent and keep all or part of any refund.

In one version of the scheme, taxpayers who thought they were applying for a short-term loan at a tax preparation business were surprised to learn that the company, without their consent, had filed a return on their behalf. The company then charged exorbitant fees, which it took from the taxpayers’ refunds.

The Wisconsin Departments of Justice (DOJ), Revenue (DOR) and Agriculture, Trade and Consumer Protection (DATCP) are asking Wisconsin consumers to notify the state when they see questionable practices. “If a consumer gives us an early notice about potential fraud at a business location, we can take quick action to protect members of the public,” DATCP Secretary Ben Brancel said. “This is far more preferable than hearing about the problems after the fact, when it’s often too late to recover consumers’ money.”

The Department of Revenue's mission is to process state tax returns accurately and as quickly as possible. These fraudulent tax preparers slow down the processing of returns and can delay refunds for Wisconsin taxpayers.

"One of our goals is to provide excellent customer service and make the taxpaying process as user-friendly as possible," said DOR Secretary Richard Chandler. "Fraudulent tax preparation businesses work against this goal and cause hardship to Wisconsin taxpayers."
Here are some tips to avoid becoming the victim of tax preparation fraud:

•Be careful providing personal financial information to a tax preparation business unless you want the preparer to file your taxes. Make sure you provide clear direction and that the preparer specifically advises you on whether he or she intends to file a tax return on your behalf.

•Never sign an authorization permitting a company to file your taxes if you do not want the company to do so.

•Never sign a document without first reading and understanding what it says.

•Always insist upon receiving copies of all documents you are required to sign, or which identify the terms of a transaction and the charges you will be required to pay. Confirm, before signing, that you will receive copies. If a business does not agree to provide copies, don’t sign.

•Before choosing a tax preparer, do your research and try to get references from other clients if possible.

•Be alert to promotions such as “holiday loans” or other short-term loans that can be used to gain the personal financial information needed to file an individual’s tax return.

“Our message to fraudsters is simple: Don’t engage in tax-related scams in this state,” Attorney General J.B. Van Hollen said. “The state will aggressively investigate and prosecute those who steal consumers’ refunds through fraudulent schemes.”

Anyone suspecting fraudulent activity is encouraged to file a complaint with the state. Complaints can be filed online through the DATCP website or a complaint form can be requested by calling the state’s Consumer Protection Hotline at 800-422-7128.


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