US Tax Scammers Preying on Low Income Communities

July 12, 2011 Taxation in USA

Tax Scams in the USElderly taxpayers and church congregations in the South and Midwest of the US are fast becoming are favorite target for tax scammers, with a surge in the numbers of reported tax scams coming from the regions.

In a press release issued on July 11th the US Internal Revenue Service (IRS) revealed that throughout 2011 there has been a marked increase in reported tax scams involving individuals’ tax returns. Many of the cases revolved around taxpayers being approached by tax preparers and agents, who were offering tax credits, refunds or rebates to which the taxpayers were not entitled.

The IRS is warning taxpayers to be cautious when approached by tax agents and preparers who are offering seemingly guaranteed tax refunds. In particular, individuals are advised to look out for companies advertising payouts through the use of “Treasury Form 1080”, and service providers advising taxpayers to make exaggerated or false claims of self-employment incomes and expense. According to the IRS, individuals who are eligible for tax refunds from these systems can receive free assistance to complete the appropriate filing requirements and should not pay third parties to do so. Additionally, the preparers often alter the taxpayer’s returns to exaggerate the claims, and pocket any additional refund payment. According to the IRS press release, these services are often spread via word of mouth, through small low-income communities.

Several schemes have also appeared offering tax refunds without any necessary documentation or proof of income. These offers are often completely fraudulent and are set up purely to collect personal information on taxpayers, for the purposes of identity theft. Notably, providers of these scams often approach small church congregations or advertise their services on church notice boards.

Photo by AMRosario