Filing taxes can be a complicated and confusing process. Because of that there area myriad of scam artists and criminals willing and ready to take advantage of people when it comes time to file taxes every year. If there's a dollar to be made, they'll be there trying to take it from you.
Because there are so many fraudulent or unethical programs out there trying to take your money from you (willingly or unwillingly), it's important to make sure that you use someone you trust in order to help you with your taxes.
For our household that means using one of the tax software to help us file. For others that may mean using a CPA or other tax professional. Still others will use a retail tax filing location. What it comes down to, however, is to make sure that you're educated about the tax scams and outright fraud that is being perpetrated out there, and make sure to avoid people and places that will perpetrate that fraud on you.
Tax Filing Scams To Be Aware Of
The IRS puts out warnings annually of tax scams and programs to be wary of. This year they've seen one particular credit being claimed fraudulently and being pushed by certain scam artists.
The Internal Revenue Service today warned senior citizens and other taxpayers to beware of an emerging scheme tempting them to file tax returns claiming fraudulent refunds.
The scheme carries a common theme of promising refunds to people who have little or no income and normally don’t have a tax filing requirement. Under the scheme, promoters 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.
So the scammers will tell people to basically fraudulently claim a tax credit for which they're not eligible, often then charging a big upfront fee for the service.
Some other things the IRS says to beware of when getting filing advice, and that should throw up red flags.
- 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.
For me the key is this: If a tax credit or promise of a refund sounds too good, it probably is. Your best bet is probably to stick with a company or CPA that you trust, have them explain your return to you, and explain why you're getting certain credits and deductions. If something sounds fishy, double check it on your own, or call the IRS to verify.