Tax Time Warning: The I-Team is there as the city issues citations

CHICAGO (WLS) -- The ABC7 I-Team was with city of Chicago investigators as they handed out "cease and desist orders" to some businesses and has a warning for consumers before giving up their W2s this tax season.

There are several rules that tax preparers in the city of Chicago must follow before taking your money. One of them is having the proper license to file your taxes so they can be held accountable if anything goes wrong. The I-Team was there as some preparers got slapped with citations.

A man identified himself as an employee after city inspectors issued citations to Insurance Plus and a separate vendor, eTax Partners, which does taxes in the business storefront, in the city's South Chicago neighborhood, but the city's Department of Business Affairs and Consumer Protection says the tax vendor doesn't have the proper license.

DOCUMENT: Chicago Tax Preparation Disclosure
DOCUMENT: Tax preparation regulations, tips flyer

"They are an insurance company regulated by state which does not cover tax prep services," said Sandra Diaz.

They issued a cease and desist order, and slapped a "business closed" sign on the door, saying the store can't do taxes.

But BACP Undercover Investigators also say they found that the business was not providing customers with a disclosure form or a "consumer bill of rights," which informs consumers that they must be given an estimate of charges and details on prices. It also reminds customers they don't have to take those instant refunds which may cost more money in the long run.

One woman also told BACP Investigators "she was just a worker" at Mayorga Realty in the Gage Park neighborhood.

"One of my investigators entered the location posing as a potential customer asking for tax information," said supervisor of investigations Jaime Martinez. "At that time the employee did not provide the investigator the consumer bill of rights and the required disclosure form."

The realty business, which also advertises income tax services, now faces citations for not supplying those consumer forms and not having a proper license.

"If something happens and you feel that fraud was committed or there was a problem with your return you come back to the business and they are out of business you can still file a complaint and we know who that person was that helped you out," Martinez said.

They too have a sign on the door saying they can't prepare taxes.

Messages were left at the store and no one answered at two listed addresses for the owner of Mayorga Realty.

If you're not using a certified accountant or an attorney for your taxes and you decide to go with a "tax preparer" in a storefront you need to:

• Ask for their preparer tax identification number from the IRS.
• Check their record online or with the better business bureau.
• Make sure you have specific contact information of your preparer.

In a statement Friday the business Insurance Plus said: "The order was directed and addressed to eTax, not Insurance Plus. Although we maintain a business relationship with eTax, we do not perform tax preparation services and are not a 'tax preparer.'"

The I-Team has yet to heard back from eTax Partners. The city says Mayorga Realty got its proper license Friday and all of the businesses will have an opportunity to fight citations in court.

Find a Free Tax Preparer. The City of Chicago has partnered with the Center for Economic Progress and Ladder Up to support eligible families and individuals who cannot afford professional tax preparation services. Visit www.taxprepchicago.org to find the nearest free tax preparation site.

Report abusive tax preparers to Business Affairs and Consumer Protection.

BACP tax preparers investigation numbers

During the investigation targeting predatory tax preparers, BACP investigated 409 known tax preparers and found that 65 percent of the businesses visited by City inspectors were not in compliance with the City ordinance regulating tax preparation services. As a result, four businesses received a cease and desist orders; 13 received notices to correct their (limited business license) licensing; 334 Administrative Notices of Violations (ANOVs) were issued to 147 businesses that will have to appear at administrative hearings. The cited violations include operating without a license, failure to provide a consumer bill of rights, operating illegally or without state of Illinois approval; and failure to provide written disclosure. Fines for each violation can range from $50 to $10,000 per offense. There is the potential for $94,600 to $340,750 in fines based on 334 ANOVs issued.

Here is a breakdown of the numbers:

• 409 Investigated
• 78 In Compliance
• 147 Not In Compliance
• 114 Out of Business
• 9 Do not perform tax services
• 61 Under review
• 334 Tickets
• 4 Cease and Desist
• 13 Notice to Correct
• 71 Have not been Investigated
• YTD: 65 percent Not In Compliance
• 35 percent In Compliance