The Trust Lawyers Blog

Tax Refund Scam: A Warning For Seniors

Posted by Bridget T. Faldetta, Esq on Thu, Jun 07, 2012

tax refund scamSenior citizens and low-income taxpayers beware: there's a new tax refund scam making the rounds that has already been responsible for thousands of fraudulent tax returns.

According to the IRS, this new tax refund scam centers around the American Opportunity Tax Credit, which offers up to $2,500 in tax credits to anyone who attended college in the past tax year. What makes it an attractive lure for scammers is that up to $1,000 of that is refundable, even to people who paid no net taxes in the previous year. The intention of the credit was to provide some financial assistance to college students struggling in the current economy.

The scammer targets people who have not attended college in decades, or ever, and are therefore ineligible for the credit. They may claim that the credit extends to any college courses ever taken, or even that it's a refund for taxes paid on groceries.

The scammer informs the victim that they are eligible for the credit and files the victim’s return for them. The scammer may offer to split the refund, or find some other excuse to have the refund sent to them before it's sent to the victim. They also often charge high fees for their "service." However it's done, if the scammer does successfully receive the victim's refund, they are never heard from again.

This tax refund scam can be especially costly because, if successful, it leaves the victim responsible for repaying the fraudulent refund. The victim doesn’t just lose whatever refund they are legitimately owed, but they also potentially end up owing the government up to a thousand dollars they don't have.

The IRS offers a number of tips on their website for how to select a legitimate tax preparer, to help you avoid these sorts of tax refund scams.

When it comes to your taxes, prudence is always the best policy. When in doubt, contact a reputable tax lawyer for a second opinion.

Tags: Tax Refund Scam, Income Tax, Minimize Taxes