A.G. Schneiderman Moves To Shut Down Syracuse Tax Preparer That Overcharged Consumers

SYRACUSE - With the 2013 tax filing season in full swing, Attorney General Eric T. Schneiderman announced today that his office has launched an investigation and moved to shut down the office of a Syracuse tax preparer accused of overcharging consumers. Following complaints from customers, the Attorney General’s office delivered a cease and desist letter to Danny Duc T. Tran d/ba/ Tax Affairs, located at 1004 Butternut St in Syracuse, ordering him to immediately stop overcharging customers and demanding that he produce client records including documentation of all fees paid to him.

According to consumer complaints, Mr. Tran verbally quoted tax preparation fees that were hundreds of dollars less than what he actually billed them. For example, one consumer was quoted $125 for tax preparation services, but $974 was electronically deducted from his refund by the preparer. Another consumer was quoted $215, but the preparer deducted $615 from the consumer’s electronically deposited refund. In addition, all of the consumers were billed a $35 refund transfer fee for the IRS to deposit their refund into a temporary bank account created for this tax season.

“Taking advantage of innocent people in this tough economy is shameful, and will not be tolerated by my office,” said Attorney General Schneiderman. “New Yorkers who are trying to obey the law by filing their taxes on time should not have to worry about being ripped off by tax preparation scammers covertly charging them excessive fees, or peddling other cons. Tax season is stressful enough. That’s why my office is helping provide New Yorkers the information they need to make sure they don’t get ripped off by scam artists.”

This case, which is ongoing, highlights the potential for deceptive and fraudulent practices that can take place during the tax season. Taxpayers should be alert to tax preparation businesses that advertise low fees to get the customer in the door, but then increase the final fee by hundreds of dollars claiming the tax return was more complicated than anticipated or, as in this case, to a tax preparer who electronically withdraws more than the agreed upon fee without notice to the consumer.

Tax season also brings about other types of scams. Some scammers prey on senior citizens or college students by impersonating tax authorities, soliciting follow up information on a tax form, and collecting identification numbers and social security information, which is then used to steal people’s money or identities. Some scammers have even gone to the extreme of using “spoofing technology” to make their caller ID numbers come up to look like they are from the IRS.

As taxpayers look for help in filing their taxes, Attorney General Schneiderman issued the following tips for consumers:

• Use recognizable and established companies;
• Check the tax preparer's qualifications;
• Check the tax preparer's history through the Better Business Bureau;
• Ask for a written estimate of all fees;
• Avoid those who base their fees on a percentage of your refund;
• Make sure the tax preparer is accessible, even after the April due date;
• Never sign a blank return;
• Review entire return before signing;
• Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number (PTIN);
• Avoid "too good to be true" promises;
• Consult New York's "Consumer Bill of Rights Regarding Tax Preparers.”

Consumers should also beware of refund anticipation loans (RALs) and refund anticipation checks (RACs). RALs are often marketed as "instant" or "24-hour" refunds but are actually high cost loans than come with fees and interest that reduce the amount of any refund. New York State’s General Business Law section 372 (known as the Consumer Bill of Rights regarding Tax Preparers), requires RALs to be marketed as loans - not refunds. RACs are temporary bank accounts established on behalf of a taxpayer into which a direct deposit refund can be received but these also come with fees that will reduce the consumer’s refund. The tax preparer must give the consumer a written disclosure that explains:

• You are not required to take out a refund anticipation loan or refund anticipation check in order to receive your tax refund
• The amount of fees and interest you will have to pay if you take out a refund anticipation loan or refund anticipation check
• The amount you will receive after the fees and interest are deducted
• The annual percentage rate of interest that you will be charged
• The amount your refund will be if you don’t take out a refund anticipation loan

Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds either mailed or directly deposited into their own bank account.

The Attorney General is also reminding New Yorkers that there are Volunteer Income Tax Assistance (VITA) sites where consumers can get their tax returns prepared free of charge. For more information about how to qualify and identify a VITA location site go to: www.irs.gov/individuals/article/0,,id=107626,00.html

Consumers whose income is $57,000 or less may qualify for FreeFile and can use free tax preparation and free e-filing software. Information on free e-filing is available at: www.tax.ny.gov/pit/efile/freefile.htm.

Some additional websites with helpful information include:

Internal Revenue Service
www.irs.gov/taxtopics/tc254.html
www.irs.gov/newsroom/article/0,,id=120129,00.html

NYS Consumer Bill of Rights Regarding Tax Preparers
www.tax.ny.gov/pdf/memos/income/m08_7i.pdf

NYC Department of Consumer Affairs

www.nyc.gov/html/dca/html/home/home.shtml

Attorney General Schneiderman is urging New Yorkers to be vigilant consumers and to report instances of fraud to his Office. Consumers who feel they've been victims of any tax preparation scams are urged to file complaints by visiting the Office’s website or calling 1-800-771-7755.

The investigation into Mr. Tran is being handled by Assistant Attorney General Judith C. Malkin and Ed S. Thompson, Assistant Attorney General In-Charge of the Syracuse Regional Office, under the supervision of Executive Deputy Attorney General for Regional Affairs Martin J. Mack. Investigator Andrea Burnham of the Syracuse Regional Office also assisted with the investigation.