Somali Tax Preparers Accused of Seeking Unwarranted Refunds

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."

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
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.
Apr 30
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.