The Internal Revenue Service and Minnesota tax officials are looking into 3,500 questionable tax returns filed on behalf of Somali immigrants.
Eleven tax preparers, themselves Somalis, are suspected of taking advantage of the recent immigrants’ confusion about the U.S. tax code, language difficulties and blind trust, community leaders told the Associated Press. The state stopped payment on about $3 million in unearned refunds, claimed by tax preparers who inflated their clients’ income, created fictional dependents or made improper business deductions.
"I'm shocked. Certainly, betrayed," said Safia Omar, a social worker at the Somali Community of Minnesota in St. Paul. "They're the victims in this case. A Somali person is doing the taxes so you trust them. You never thought they would jeopardize your status here."
Omar said Somali immigrants put their faith in tax preparers who spoke better English and lived in the States longer. With little understanding of tax credits or deductions, the victims now may be faced with having to return unearned tax refunds.
Abdi Samata, a geography professor at the University of Minnesota, said that under the Somali system, taxes are paid per transaction, much like a sales tax.
"The tax collector received fees when, for instance, a farmer sold his products at the market. You paid as you went and that was it," Samatar said. The only Somalis to pay income taxes are doctors, lawyers and government employees. Most Somalis are self-employed.
Saeed Fahia, executive director of the Confederation of Somali Community in Minnesota, said that rather than pursue criminal charges against individual taxpayers, the IRS and the state Department of Revenue are helping them correct their return. The state agency is setting up a tax clinic to help educate the Somalis.
"I'm hoping something positive will come out of it in (the) long run," Fahia said. "It's a wake-up call for the community. From now on people will be careful about how they contract with a tax preparer — look at their credentials."