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...
There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...
Did you know that the tax code allows you to claim tax deductions for household damage caused by thefts, vandalism, fires, floods, hurricanes, and others kinds of casualties? But the law imposes several restrictions.Relief...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
FRF for SMEs Series--Measurement and Disclosure Principles for various Consolidations and Business Combinations, Part 4B
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
In this session we'll review best practices for how to generate interest in your firm’s services.
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.