IRS Offers Advice for Avoiding Phony Tax Scheme
The Internal Revenue Service is providing tips to help taxpayers avoid a new tax scam involving bogus college tax credits. The IRS issued a warning about the new scheme on Frida. Scammers have been targeting senior citizens, members of church groups, working families and other potential victims this tax season.
The schemes promise large tax refunds to people who have little or no income and normally don’t have a tax filing requirement. Promoters claim they can obtain for their victims a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.
Con artists falsely claim the tax refunds are available even if the victim went to school decades ago. In many cases, the scammers are targeting seniors, people with very low incomes and members of church congregations with bogus promises of free money.
A variation of the scheme also falsely claims the college credit is available to compensate people for paying taxes on their groceries.
The schemes can be extremely costly for the victims. Promoters may charge them exorbitant upfront fees to file the tax claims and are often gone before victims discover that they have been scammed.
The IRS warned taxpayers to be careful of the scams because, regardless of who prepared their tax return, the taxpayer is legally responsible for the accuracy of their tax return and must repay any refunds received in error, plus any penalties and interest. They may even face criminal prosecution.
To avoid becoming ensnared in these schemes, the IRS said taxpayers should beware of any 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.
In recent weeks, the IRS said it has identified and stopped an upswing in these bogus tax refund claims coming in from across the country. The IRS is actively investigating the sources of the scheme, and its promoters can be subject to criminal prosecution.
- Increase in Recovery of VAT on Financial Services in No Deal Brexit
- HMRC Issued a Petition for Winding up to Notts County Football Club
- London Grocer Found Guilty in £120k VAT Fraud
- HMRC Enquiring English Premier League Clubs and Players Over Potential Tax Avoidance on Sale of Players’ Image Rights
- VAT Fraud Leads Father and Son Duo to Jail
- Mechanic Ordered to Pay Back £208k with Respect to a Tax Fraud
- Large Businesses Tax underpayments increases by 13% to £25bn