Tax Scams – Watch Out for These Frauds
July 17, 2011
Terry Peltz, Director
Performance Advisors LLC
The IRS is asking taxpayers to protect themselves against individuals who claim to be from the Internal Revenue Service and try to get them to file false claims for tax credits and/or rebates.
There has recently been an increase in tax scams which involve taxpayers who don’t normally have to file a return. They are scammed into believing that they need to file a tax return to get credits, refunds or rebates. These scammers have been targeting individuals in the South and the Midwest.
Most tax preparers are honest, but there are some who try fraudulent tactics to get more money from individuals. These people are deceitful and attempt to get taxpayers to pay for their advice on filing false claims. They charge outrageous amounts of money to prepare returns that the IRS will prepare for free or by the IRS’s Volunteer Income Tax Assistance program. In some cases, identity theft is involved.
The IRS suggests that taxpayers be on the look-out for:
- False claims for refunds or rebates for Social Security benefits.
- Form 1080 fraud that claims funds can be transferred from the Social Security Administration to the IRS.
- Unknown tax services that claim to be part of local churches.
- Poorly made flyers and brochures claiming credits and refunds without proof of eligibility.
- Claims of money with no required documentation.
- Claims of no document tax returns with the promise of a refund.
- Promising money from expired Economic Recovery Credit Program or Recovery Rebate Credits.
- Claims of receiving the Earned Income Tax Credit with incorrect self-employment income.
Social Security refunds and rebates have been used by these scammers. There are some taxpayers who qualify for these rebates or refunds, but the preparer uses fictitious information on the tax return, resulting in a fraudulent return.
Flyers and brochures have been floating around many churches, claiming a taxpayer can receive free money from the IRS with little or no documentation. These scammers have been targeting church congregations and ruining their reputations and credibility. The scammers are able to keep getting away with it by their victims telling friends and family that it is legitimate because they haven’t been contacted by the IRS about it yet.
These scammers generally target low-income taxpayers and the elderly.
They convince their victims that this refund or rebate is legitimate and charge them large sums of money for their “services”. But, in the end, the victim finds out that their claim has been rejected or, if they are lucky enough to get a refund, it isn’t even enough to cover the cost the scammer has charged them. By that time, the scammer is long gone with their money.
The IRS is warning taxpayers and people who assist with preparing taxes, to stay aware of what is going on. If it sounds too good to be true, it probably is.
If you have questions about the tax credits and wonder if you actually qualify, or if you feel you have been a victim of one of these tax scams, visit www.irs.gov or call the IRS at 1-800-829-1040. You can even visit your local IRS Taxpayer Assistance Center or contact a tax professional.