A scam that promises large refunds mostly to low-income and non-English-speaking people has re-emerged in Missouri late in the tax-filing season.
The Internal Revenue Service has issued a warning about people posing as tax preparers and allegedly luring customers by promising refunds linked to education tax credits or the earned income tax credit.
The IRS said people who’ve been victimized “are discovering that a side-effect is that it will cost them their federal benefits,” including Social Security payments, certain veterans assistance and low-income housing support.
According to the IRS, some scammers operate what appears to be a legitimate tax preparation office and attract business with street corner signs or flyers that promise refunds. The victims are then asked to provide personal and financial information, which is used to file a false claim with the IRS, sometimes without the taxpayer even knowing what was filed.
The IRS said it was alerted to the scam by taxpayers who complained about losing their federal benefits. “The loss of benefits was the result of false claims being filed that provided false income amounts,” the IRS said.
Victims also have reported that the fraudulent refund was deposited into the scammer’s bank account. Then, the scammer deducted a large fee before issuing a check to the victim, according to the IRS.
While credible tax preparers provide their customers a copy of the tax return they’ve prepared, victims of this scam have reported they’ve not received a copy of what was filed, the IRS said.
To avoid problems, the IRS recommends working with tax preparers who:
• Ask for proof of income and eligibility for credits and deductions.
• Sign the return as the preparers.
• Enter their IRS preparer tax identification number and provide the taxpayer a copy of the return.