The IRS urges taxpayers to be wary of:
• Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
• Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS, enabling a payout from the IRS.
• Unfamiliar for-profit tax services teaming up with local churches.
• Home-made 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 Recovery Rebate Credit.
• Advice on using the Earned Income Tax Claims based on exaggerated reports of self-employment income.
Source: Internal Revenue Service
The old adage, “If it sounds too good to be true, it probably is,” could be applied to a rise in tax-return related scams being perpetrated across the Southeast, Internal Revenue Service officials say.
The IRS has been warning taxpayers not to be conned into filing false claims for tax credits or rebates for which they are not entitled.
“Most paid tax-return preparers provide honest and professional service, but there are some who engage in fraud and other illegal activities,” IRS spokesman Mark Green said.
Unscrupulous promoters may deceive people into paying for advice on how to file false claims, Green said. Some promoters may charge unreasonable amounts for preparing legitimate returns that could have been prepared for free by the IRS or IRS-sponsored Volunteer Income Tax Assistance partners, he said.
And, in some cases, identity theft is involved, Green said.
Most recently, scammers have been zeroing in on church congregations, often preying upon elderly and low income residents, he said.
Alabama and Mississippi are the two states that have reported the highest number of these types of scams, IRS media specialist Dan Boone said.
However, this type of criminal activity also is spilling over into Georgia, he said.
“This particular set of scams has been going on since May,” Boone said. “The scammers work all year long to try to entice people into doing things that will make money for them and trouble for the people that participate.”
Scams come in different forms, Boone said. Scammers may tell victims they are entitled to stimulus money or government rebates.
“In today’s economy, the prospect of getting easy money is something some people will not question,” he said.
Social Security recipients in particular may be told they are eligible for a government rebate because they have not received a cost of living increase over the past several years, Boone explained. Scammers may encourage such victims to pay them to fill out rebate request forms for 2008, 2009 and 2010.
“Here’s the rub,” he said. “The IRS erroneously processed some of these claims before we identified this as a scam. The sad part is those people who got these checks will be asked to repay these rebates along with interest and possibly penalties.
“Of course the scammers are long gone with the folks’ money at that point.”
Boone said the IRS is working with local law enforcement and the Better Business Bureau to solve these crimes. The criminal investigation division of the IRS also investigates organized scams, as well as tax evasion and failure to file returns, he added.
Bishop Samuel T. Brown, pastor of New Church of Holiness Unto the Lord of the Apostolic Faith and owner of Brown’s Tax & Accounting in Midway, said he has not been aware of any such tax scams in Liberty County.
Bethesda Church member and Financial Peace University coordinator Charlene Parlett said she also has not heard of any tax-return scams in Liberty County, but said con artists have tried to prey on local residents.
Some of the older people who participated in her church’s comprehensive financial course this past spring reported getting phone calls from potential scammers fishing for personal information, she said.
“They were at least reading enough of the newspapers they didn’t fall for it,” Parlett said. “It seems the best defense for some of these scams is awareness.”
She also recounted hearing of five families who were conned out of more than $250,000 by a man posing as a financial planner several years ago. This criminal targeted successful business people and retirees, she said.
“That individual is now serving nine years in a federal pen for doing the same thing to a group of individuals in New Jersey,” she said.
Bethesda Church will offer financial expert Dave Ramsey’s 13-week course on debt reduction, budgeting, insurance, retirement, investing, mortgages and career planning beginning on Aug. 9. For more information on the class, call Parlett at 368-6121.
For more information about tax credits or programs visit www.IRS.gov or call the IRS toll-free at 1-800-829-1040.