IRS Sends Warning about New Education Tax Credit Scam
by AccountingWEB on
By AccountingWEB Staff
A new scam is targeted at those with so little income that they normally don't need to file a tax return, the IRS says.
The scam involves trying to persuade victims to file a false tax return to claim refunds or stimulus payments based on the American Opportunity Tax Credit, even if the victim is not enrolled in college or paying for classes and is therefore not eligible. One twist on this scheme involves falsely contending the college credit is available to compensate people for paying taxes on groceries. (Accurate information on education tax credits can be found on the IRS website.)
These scams, which are being investigated, also target senior citizens, church members, and others who will have to pay back any refunds they receive mistakenly.
MarketWatch reported other scams that involve phishing e-mails claiming to be from Intuit or other tax-software providers that aim to get victims to enter personal information on a scammer website.
The IRS says accountants should tell their clients that they are legally responsible for their tax returns, even if they use paid preparers. Also, taxpayers should watch out for those who charge high upfront fees to file their claim.
Your clients should watch for:
- 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.
The IRS "Dirty Dozen" Tax Scams for 2012 is available online.
You may like these other stories...
Truckers and other owners of heavy highway vehicles take note: Your next federal highway use tax return is due on September 2.The September 2 due date, which was pushed back two days because the normal August 31 deadline...
The head of the IRS has a message for taxpayers and tax preparers who have endured long wait times while on the phone with the tax agency: Call your member of Congress.During his keynote speech at the 69th Annual Meeting of...
Regulators struggle with conflicts in credit ratings and auditsThe Public Company Accounting Oversight Board (PCAOB), which was created by the Sarbanes-Oxley Act in 2002, released its third annual report on audits of...
Upcoming CPE Webinars
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.