IRS Sends Warning about New Education Tax Credit Scam

A new scam is targeted at those with so little income that they normally don't need to file a tax return, the IRS says.

The scam involves trying to persuade victims to file a false tax return to claim refunds or stimulus payments based on the American Opportunity Tax Credit, even if the victim is not enrolled in college or paying for classes and is therefore not eligible. One twist on this scheme involves falsely contending the college credit is available to compensate people for paying taxes on groceries. (Accurate information on education tax credits can be found on the IRS website.)

These scams, which are being investigated, also target senior citizens, church members, and others who will have to pay back any refunds they receive mistakenly.

MarketWatch reported other scams that involve phishing e-mails claiming to be from Intuit or other tax-software providers that aim to get victims to enter personal information on a scammer website.

The IRS says accountants should tell their clients that they are legally responsible for their tax returns, even if they use paid preparers. Also, taxpayers should watch out for those who charge high upfront fees to file their claim. Your clients should watch for:

- 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.

The IRS "Dirty Dozen" Tax Scams for 2012 is available online.