As taxpayers, we entrust vital personal data to the person preparing our tax returns, including pay stubs, investments, and Social Security numbers.
But not all tax-preparers are ethical. To thwart identity thieves and other unscrupulous tax-preparers, the Internal Revenue Service in January plans to launch a database of those the agency deems qualified.
This new Directory of Federal Tax Return Preparers with Credentials and Select Qualifications (not a joke - that's the name) should be available next month on the IRS website to help taxpayers verify credentials and qualifications of tax professionals.
The directory will be a searchable, sortable database with name, city, state and zip code of credentialed preparers, as well as those who have completed a new IRS credential program. The proper credentials include having a valid 2015 Preparer Tax Identification Number (PTIN).
The IRS recently updated its Choose a Tax Pro web page (www.IRS.gov/chooseataxpro), and partnered with industry groups, such as the American Institute of Certified Public Accountants and the American Association of Attorney-Certified Public Accountants.
To avoid identity theft, never sign a blank tax return.
This is a serious red flag: The tax preparer can insert anything on a blank return, even his or her own bank account number, and then steal your tax refund.
Also, the IRS does not contact taxpayers by telephone, e-mail, or text demanding money. If someone does contact you in any of those ways, it's a scam.
Here are the tell-tale signs:
Phone calls demanding immediate payment; the IRS will not call you regarding taxes owed without first having mailed you a bill.
Demands that you pay taxes without giving you the opportunity to question or appeal the amount.
Demands that you use a specific payment method for your taxes, such as a prepaid debit card.
Requests for credit or debit card numbers over the phone.
Threats to bring in local police or other law-enforcement groups to have you arrested for not paying.
Don't pay. Instead, telephone the IRS directly (1-800-829-1040) and report the incident to the Treasury Inspector General for Tax Administration (1-800-366-4484) or at the IG's website (www.tigta.gov).