Wednesday, March 7, 2012

When Is a Refund Not a Refund? When It's Phony

From the Wall Street Journal:

The Internal Revenue Service is warning senior citizens and others to beware of come-ons that use the promise of tax refunds to tempt them to file returns. The agency said it has seen a surge of fraudulent claims coming in from across the U.S.

The IRS, which said it has detected and stopped thousands of fraudulent claims, warned that promoters charge large upfront fees to file the claims and then have disappeared by the time taxpayers discover they’ve been scammed.

“This is a disgraceful effort by scam artists to take advantage of people by giving them false hopes of a nonexistent refund,” said IRS Commissioner Doug Shulman.

In most of its guises, the scheme promises refunds to people with little or no income who normally don’t need to file a tax return. Promoters promise victims they can obtain a tax refund or other payment based on the American Opportunity Tax Credit - which couples with adjusted gross incomes of less than $160,000 can use to help cover higher-education costs – even if the victim isn’t enrolled in or paying for college.

The agency says that con artists often falsely claim that refunds are available even if the victim went to school decades ago. It added that the victims often include senior citizens, people with low incomes and members of church congregations.

To avoid being entrapped by this scheme, the IRS is warning taxpayers to beware of the following:

  • Fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.

  • Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.

  • Internet solicitations that direct individuals to toll-free numbers and then solicit Social Security numbers.

  • Homemade 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 for economic-stimulus payments.

  • Unsolicited offers to prepare a return and split the refund.

  • Unfamiliar return-preparation firms soliciting business from cities outside of the normal business or commuting area.
For additional information on tax scams, see “IRS Warns on ‘Dirty Dozen’ Tax Scams for 2012.”

March 6, 2012

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