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Warning: Tax Preparer Fraud Ahead

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Wednesday, March 3, 2010   

LOUISVILLE, Ky. - For many Kentuckians, saving a few hundred dollars at tax time can be a blessing. In order to receive that payoff legally, however, you need to carefully choose the person helping you prepare your income tax return.

According to John Young of the Kentucky Legal Aid Society, while most tax businesses provide honest service to their clients, there are a number of signs to look for when selecting a reputable tax preparer. He cautions against those who see tax preparation as part-time, seasonal work.

"I'm talking about the preparer that hasn't set up a storefront for four months so that, if there is a problem or if there is a mistake, you can go back and have that addressed."

The Internal Revenue Service (IRS) advises that, when choosing a tax preparer, taxpayers should be just as careful as they would in selecting a doctor or lawyer. The IRS also suggests consumers be cautious of tax preparers who claim they can obtain larger refunds than other preparers, and avoid those who base their fee on a percentage of the refund.

Young's advice is to hire a tax professional who is qualified to sign the tax return and will provide a contract, as well as copies of these documents.

"You want to have a written contract that says the preparer will pay any penalties and interest due to their mistake, so that you're not on the hook for it."

He says it is also smart to ask friends and family members if they know anyone who has used the tax professional, and whether they were satisfied with the service they received.




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