An increase in tax-return-related scams prompted the IRS on Monday to issue an alert, urging taxpayers to be wary of promoters who engage in fraud and other illegal activities.
The agency said unscrupulous people are gulling taxpayers in the South and Midwest into filing for tax credits, refunds or rebates for which they are not entitled.
Others are charging unreasonable rates for legitimate return preparation that could have been done for free by the IRS or IRS-sponsored Volunteer Income Tax Assistance partners. In still other situations, identity theft is involved.
The IRS said taxpayers should be on the lookout for any of the following:
- 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 claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income
The agency said unsuspecting individuals—often low income individuals and the elderly—are most likely to get caught up in scams, and it warned all taxpayers, and those that help others prepare returns, to remain vigilant. “If it sounds too good to be true, it probably is.”
In a further effort to smoke out unscrupulous tax preparers, the IRS announced Tuesday that it had begun sending out letters to 100,000 preparers who had either used an outdated Preparer Tax Identification Number (PTIN) or a Social Security number as identifying numbers on returns they prepared this filing season.