Advice from Uncle Sam: Beware the tax scams


If you use a tax pre­parer that of­fers to get you an edu­ca­tion cred­it when you haven’t been to school, you’re prob­ably go­ing to learn something you wouldn’t learn any oth­er way.

That’s a les­son, say your friends at the In­tern­al Rev­en­ue Ser­vice, that will cost you money and get you in­to trouble.

The short ver­sion of the IRS warn­ing is: Don’t.

But this is, after all, tax sea­son, and every­body longs for a large re­fund. Con men will prey on that de­sire and push phony de­duc­tions or claims for tax cred­its on vic­tims either to drum up more busi­ness or try to get chunks of in­flated re­funds.

A red flag should wave in your con­scious­ness, said Spe­cial Agent Shauna Frye, spokes­wo­man for IRS Crim­in­al In­vest­ig­a­tions in Phil­adelphia, if the pre­parer wants a per­cent­age of what he tells you he can get for you.

Most le­git­im­ate tax pre­parers, she said, charge flat rates for their ser­vices.

Some tax pre­parers, look­ing to get word-of-mouth that they can get big tax re­funds for their cli­ents, put claims for tax cred­its on re­turns without their cli­ents’ know­ledge, Frye said.

“For the most part, it’s really just a tool to get more busi­ness,” she said. “It’s not the norm.”

The IRS is warn­ing tax­pay­ers, es­pe­cially seni­or cit­izens, to be wary of prom­ises of re­funds if they have little or no in­comes or don’t nor­mally file tax re­turns.

Pro­moters of such schemes, the IRS said in a news re­lease, “claim they can ob­tain for their vic­tims, of­ten seni­or cit­izens, 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.”

“This can be a pretty sig­ni­fic­ant chunk of change,” Frye said.

The IRS said it already has stopped thousands of such fraudulent claims and it is investigating the sources of the con, whose promoters may be subject to criminal prosecution. It’s the victims, however, who are legally responsible for the accuracy of their returns and must repay refunds that are more than they should be.

At some point, Frye said, the IRS is go­ing to find out you wer­en’t in school.

“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. “We want to warn innocent taxpayers about this new scheme before more people get trapped.”

“Typ­ic­ally,” the IRS said, “con artists falsely claim that re­funds are avail­able even if the vic­tim went to school dec­ades ago. In many cases, scam­mers are tar­get­ing seni­ors, people with very low in­comes and mem­bers of church con­greg­a­tions with bogus prom­ises of free money.”

An­oth­er vari­ation is the claim that the col­lege cred­it can be used to get re­funds for taxes paid on gro­cer­ies.

Here are some clues that a tax pre­parer wants you to do something not on the up-and-up:

• 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 fli­ers 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.

Frye said most tax pre­parers act re­spons­ibly and per­form good ser­vices for both their cli­ents and the gov­ern­ment. For ad­vice on choos­ing a com­pet­ent tax pro­fes­sion­al, see Tips for Choos­ing a Tax Re­turn Pre­parer on ••

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