OPINION: When it comes to taxes, file early, and electronically

Paying taxes can be confusing, but here’s the simplest of advice: Do it early.

“When it comes to tax season, the best thing is just to file early and file electronically,” says Stephanie Schardin Clarke, the state’s Taxation & Revenue Department’s secretary.

The state tax season opens on Feb. 3, and the federal tax season opens on Monday.

There are numerous and evolving ways that taxpayers can get caught up in scams, but some of the most prevalent can be thwarted by getting a head start on the season.

“A lot of personal information is available on the dark web through data breaches,” Schardin Clarke said in a recent interview. Scammers can “pretend they’re you with your Social Security number and get (your) refund, before your real return comes in.”

She also encourages filing electronically to avoid mail theft at postal boxes and to receive any refunds more quickly. While most people turned to filing online years ago, about 6% of the returns processed by the state are handwritten.

That means employees must “key in” the information manually and “if there is an error, you get put in a queue that could take several weeks to resolve. If you efile and your return goes through … you’ll often get your refund in two or three business days,” Schardin Clarke says.

Over the past year, the state has stopped 1,376 returns that were considered fraudulent. That action, as well as a fraud review process, blocked $4.2 million from being issued in fraudulent refund claims.

Also, be on the lookout for “ghost tax preparers” who charge fees based on the supposed claim that they can save people money by filing for tax credits. They do so erroneously, pocket their earnings and disappear.

Crucially, they don’t sign the returns, nor do they include their preparer tax identification number, “which is a red flag for taxpayers to be misled into a scam or scheme,” the Internal Revenue Service says. “In many cases, these are inflated tax refunds that lead to millions in revenue loss and add risk for taxpayers who file potentially improper claims with only the individual’s name associated with the tax return.”

The IRS also is warning about social media claims “that can lure honest taxpayers with bad advice, potentially leading to identity theft and tax problems.” The federal agency, along with a coalition of states and software and financial companies, recently announced it will send letters to people whose preparers fail to sign or include proper identification.

New Mexico is part of that coalition, formed after last tax season, when the IRS saw thousands of dubious claims for the fuel tax credit, family leave credit and household employment taxes.

Protect yourself by making sure the tax preparer you choose has the required identification number. Ask about service fees, and avoid those who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts.

Consider it a red flag when someone claims they can get larger refunds than their competitors, and make sure they are available year-round in case questions arise.

Report suspected fraud activity to the state through the fraud hotline at 1-866-457-6789 or by email at Tax.Fraud@tax.nm.gov

Contact Ellen Marks at emarks@abqjournal.com if you are aware of what sounds like a scam. To report a scam to law enforcement, contact the New Mexico Consumer Protection Division at 505-490-4060. Complaints can be filed electronically at nmag.gov/contact-us/file-a-complaint/