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...
As mentioned in today’s “Bramwell’s Lunch Beat” via an article from the USA Today, a new report from the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS doled out $2.8...
London Stock Exchange switches auditing to EYThe London Stock Exchange will drop PwC as its auditor and replace it with EY after completion of the audit for the year ending March 2014, Harriet Agnew of the Financial Times...
With tax season in the past, it's time to think about the tax implications of decisions your clients may be making about their homes in 2014. The rules are complicated and because of the huge amounts involved, the...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.