There is no such thing as free money.
Let’s just go ahead and get that out of the way first thing.
Our Treasury does not have a pot of money just sitting around waiting for you to scoop it up (we’re nearly bankrupt, remember?)
And no matter what anybody tells you otherwise, tax credits, refunds and rebates are based on a set of tax-related criteria. You don’t get points on your tax return for being cute or Welsh or listening to country music.
Despite the fact that deep down we all know that you can’t get something for nothing, the IRS is seeing an increase in attempts to get taxpayers to file false claims for tax credits or rebates. These efforts – scams – are generally targeted to lower income taxpayers who might not have a filing requirement in the first place.
In particular, the IRS has noted a flurry of schemes in the South and Midwest tied to local churches. The folks that promote these schemes have been posting flyers and advertisements claiming that free money is available from the IRS. They further suggest that little or no documentation is required in order to file for large refunds and rebates. And since they are “partnering” with churches, based on false promises to the congregation and staff of the church, some taxpayers believe that the claims must be true.
A number of the schemes are targeting the elderly and low income individuals who are advised that they may be entitled to refunds based on excess Social Security benefits or payouts. Schemers are also advising taxpayers that they can transfer funds from the Social Security Administration directly to the IRS by simply filling out a form.
What do the promoters of these schemes get out of it? In some cases, these unscrupulous preparers get paid large fees upfront. In others, they may be inflating credits and deductions in exchange for a piece of a sizable refund.
Don’t be fooled. If something sounds too good to be true, it probably is. Here are some danger signs to look for:
- Offers for tax refunds or rebates that state that no documentation is required;
- Claims for expired credits (such as the Economic Recovery Credit Program or Recovery Rebate Credit);
- “Reconstructed” (in other words: made up) tax forms that misstate your income;
- Advice that suggests you exaggerate the amount of income you make in order to increase availability for tax credits;
- Requests for bank or personal information that is not related to your taxes;
- Large, upfront payment for services from tax preparers that appear overnight or that you’ve never heard of; and
- Preparers who refuse to sign tax returns.
Trust your gut. If you don’t feel comfortable, walk away. A real tax professional won’t be insulted if you do – and a bogus one doesn’t deserve your business.
If you have questions about your tax benefits or your tax account, check with your trusted tax professional. You can also call the IRS for free at 1.800.829.1040 or visit a local IRS Taxpayer Assistance Center (many are open today!).
