IRS Scam Warning | Crime
The Internal Revenue Service is warning of a scam in Minnesota that promises a tax refund or rebate based on Social Security benefits. The scam is prevalent across parts of the Midwest and South, including Minnesota and Wisconsin.
“The scam encourages people to file tax returns to get a refund, rebate or stimulus check based on withholding from Social Security benefits,” said IRS spokesperson Carrie Resch. “The problem is that this kind of withholding never took place. The victim is out the fee the scammer charged for the return preparation and they’ve also signed a false tax return claiming a refund that is not legitimate.”
The scam targets people who aren’t normally required to file tax returns, including seniors and low income individuals. Fliers and advertisements for “free money” from the IRS, suggesting that the taxpayer can file a return and get a refund with little or no documentation, have been appearing in community churches and senior centers around the country. These schemes are often spread by word of mouth among unsuspecting and well-intentioned people telling their friends and relatives.
People are being victimized because they end up paying the scammer a fee to prepare the returns, only to find out their claims are rejected or they have to return the money to the IRS, plus potential penalties and interest.
“That’s why it’s important to make sure your family and friends are aware of the scam, so that innocent people don’t fall victim to it. Remember, if something sounds too good to be true, it probably is,“ said Resch.
In general, the IRS pursues enforcement actions against those who promote schemes or entice others to violate the law. The penalty for filing fraudulent returns with the IRS can be up to $5,000. The IRS pursues the organizers of scams and can recommend criminal prosecution.
“At the IRS, protecting taxpayer money is a matter we take extremely seriously,” said Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation division. “An integral part of the agency’s mission involves detecting and catching fraudulent tax refund claims. The object of these schemes is to defraud the government and the taxpaying public."
The IRS says taxpayers should be wary of any of the following:
· Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
· Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
· Unfamiliar for-profit tax services teaming up with local churches.
· Home-made fliers 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 Recovery Rebate Credit.
· Advice on using the Earned Income Tax Claims based on exaggerated reports of self-employment income.
· In some cases non-existent Social Security refunds or rebates have been the bait used by the con artists. In other situations, taxpayers deserve other tax credits they are promised but the preparer uses fictitious or inflated information on the return, which results in a fraudulent return.