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Watch Out for Fraudulent Tax Prep Services

Tax preparation scams have two goals in mind. The first goal is to convince potential victims to give them payment for "services rendered." A far more sinister fact about tax prep frauds is that they get access to much of your private information. Think of your address, income, bank accounts and social security number.

Tax preparation scams can quickly transition to identity theft. This danger may lurk long after tax season since scammers know that most people do not frequently change their bank or social security information.

Taxpayers looking to find tax help should know: despite the expertise of any tax prep service, ultimate liability rests with the taxpayer. Of course, scam perpetrators risk government penalties for their actions. Nevertheless, the IRS regards the taxpayer liable for false statements on IRS documents made on their behalf.

On a personal level, IRS agents investigating false tax claims may perfectly understand that a taxpayer meant well and was the victim of fraud. Nevertheless, the law states that taxpayers are not off the hook for scammers' false claims.

Legitimate tax preparation services stand out from scam operations by their reputations, properly licensed personnel and reasonable claims about how they can help. Keep tax preparer identification, signatures and copy of all paperwork. Scammers are unlikely to have an enduring business and a solid professional reputation.

Remember, tax questions can come up any time of year. Will the tax prep service be available to answer them?

Generic and unlicensed "tax help" may be worse than no help at all. When discussing pay for tax prep services, watch out for preparers who offer an incredibly large return or extremely low liability. "Too good to be true" deals tend to be just that.