IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scams

The Internal Revenue Service encouraged taxpayers to guard against
being misled by unscrupulous individuals trying to persuade them to file false
claims for tax credits or rebates.

The IRS has noted an increase in tax-return-related scams, frequently
involving unsuspecting taxpayers who normally do not have a filing requirement
in the first place. These taxpayers are led to believe they should file a
return with the IRS for tax credits, refunds or rebates for which they are not
really entitled. Many of these recent scams have been targeted in the South and
Midwest.

Most paid tax return preparers provide honest and professional service, but
there are some who engage in fraud and other illegal activities.
Unscrupulous promoters deceive people into paying for advice on how to file
false claims. Some promoters may charge unreasonable amounts for preparing
legitimate returns that could have been prepared for free by the IRS or IRS sponsored
Volunteer Income Tax Assistance partners. In other situations, identity theft
is involved.

Taxpayers should be wary of any of the following:

  • Fictitious claims for refunds or rebates based on
    excess or withheld Social Security benefits.
  • Claims that Treasury Form 1080 can be used to transfer
    funds from the Social Security Administration to the IRS enabling a payout
    from the IRS.
  • Unfamiliar for-profit tax services teaming up with
    local churches.
  • Home-made flyers and brochures implying credits or
    refunds are available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income – No Documents Tax
    Returns.”
  • Claims for the expired Economic Recovery Credit Program
    or Recovery Rebate Credit.
  • Advice on claiming the Earned Income Tax Credit based
    on exaggerated reports of self-employment income.

In some cases non-existent Social Security refunds or rebates have been the
bait used by the con artists.  In other situations, taxpayers deserve the
tax credits they are promised but the preparer uses fictitious or inflated
information on the return which results in a fraudulent return.

Flyers and advertisements for free money from the IRS, suggesting that the
taxpayer can file with little or no documentation, have been appearing in
community churches around the country. Promoters are targeting church
congregations, exploiting their good intentions and credibility. These schemes
also often spread by word of mouth among unsuspecting and well-intentioned
people telling their friends and relatives.

Promoters of these scams often prey upon low income individuals and the
elderly.

They build false hopes and charge people good money for bad advice.  In
the end, the victims discover their claims are rejected or the refund barely
exceeds what they paid the promoter.  Meanwhile, their money and the
promoters are long gone.

Unsuspecting individuals are most likely to get caught up in scams and the
IRS is warning all taxpayers, and those that help others prepare returns, to
remain vigilant. If it sounds too good to be true, it probably is.

This entry was posted in General, Taxation. Bookmark the permalink.

Leave a Reply