In March 2012, the IRS released a statement cautioning taxpayers against an emerging fraudulent tax scheme that mainly targets senior citizens and low income earners.
The scheme promises the victims a tax refund against fraudulent claims of the American Opportunity Tax Credit.
Targeted Victims The promoters of this phony fraudulent scheme are said to be mainly targeting church congregants and senior citizen's homes.
Most of the targeted victims are individuals whose incomes are low and who do not need to file a tax return because of their income threshold.
According to the IRS report, the promoters are posing as professional tax consultants with a charity angle and they are promising the victims free money against the claim.
Fraudulent Information Provided Some of the information gathered by the IRS so far is that these promoters of the fraudulent tax scheme are informing their victims that a taxpayer can claim the American Opportunity Tax Credit against college fees paid many years ago.
Others are claiming that this credit is available to all low income earners while others are claiming that the American Opportunity Tax Credit can be claimed against grocery taxes.
Taxpayer's Responsibility As part of their notice about this fraudulent tax scheme, the IRS reminded taxpayers that it is the taxpayer's responsibility to ensure that all information provided on the tax return forms was accurate.
Providing wrong information on the tax return form may have punitive consequences that may include criminal charges.
It is therefore important that every taxpayer verify information included in the return form, especially if the return was not prepared by the taxpayer.
How to Avoid Fraudulent Tax Schemes Most tax scheme promoters including the promoters of this phony American Opportunity Tax Credit claim will usually ask victims to sign blank tax return forms and assure the victim that they will include correct information as that they can be trusted.
Others will request victim to sign form without going through the details and will avoid answering questions about details included in the form.
They may also attach documents to a tax return form that do not belong to the taxpayer and give flimsy reasons for attaching such documents.
Another common practice by most of these fraudulent tax scheme promoters is that they will ask for a hefty fee upfront while guaranteeing a large refund check to the victims.
They may even produce testimonials from some of their clients who got large refund checks from the IRS.
To avoid being defrauded by these unscrupulous tax schemes promoters, it is important that you carefully scrutinize the tax professional promoting a new tax service or product.
You should ensure that the professional is registered with the IRS and has a valid Preparer Tax Identification Number (PTIN).
You may also check for other professional qualifications such as CPA, practicing attorney or Enrolled Agent.
You may also use other third party business integrity reviewers such as Better Business Bureau (BBB).