Updated: Tue, 01/29/2013 - 17:09

IRS urges students to avoid college tax refund scam

Targets include college students, seniors and church Members

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  ATLANTA – The Internal Revenue Service today warned college students and other taxpayers to beware of an emerging federal tax refund scam tempting students to relinquish their personal identification and file tax returns claiming fraudulent refunds. Misleading and bogus refund claims using the American Opportunity Education Tax Credit have been identified on college campuses throughout the Southeast Region.   These schemes carry a common theme of promising refunds to people who have little or no income, are normally being claimed as a dependent, and are not required to file a federal income tax return. Promoters falsely claim they can obtain a $1000 college tax refund or nonexistent stimulus payment for their victims based on the American Opportunity Tax Credits, even in some cases, if the victim was not enrolled in or paying for college.   Typically, con artists falsely claim that refunds are available even if the victim never went to college, or attended decades ago. In many cases, scammers are targeting college students, seniors, people with very low incomes and members of church congregations with false promises of free money.   “Most of these scams involve promoters who prey upon students and people in need, building false hopes. When victims’ claims are rejected, their money, personal tax and banking account information, along with the promoters are long gone,” said IRS spokesperson Mark S. Green. “We want to alert the public and the education communities to not be mislead, and be on guard to stop this new scheme before more innocent people are victimized,” Green added.   The IRS has already detected and stopped thousands of these bogus refund claims in recent weeks. The agency is actively investigating the sources of this scheme, and its promoters can be subject to criminal prosecution.   These schemes can be quite costly for victims as promoters may charge exorbitant upfront fees to file their claim. Some promoters of these scams have charged victims $500 for a bogus $1,000 credit. All taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error, plus any interest and applicable penalties. Those who intentionally try to defraud the government may face criminal prosecution.    “Individuals should be on-guard for these scams, and safeguard their social security numbers and personal financial information,” said Green.  Be very careful of whom you trust for tax advice and who you trust with your personal information. The IRS DOES NOT initiate contact with taxpayers by email, text, and social media- electronic communications to request personal or financial information.   Taxpayers should beware of any of the following to avoid becoming ensnared in these schemes:  

  • Homemade flyers and brochures implying credits or refunds are available without proof of eligibility or income.
  • Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.
  • Internet solicitations that direct individuals to toll-free numbers and then solicit social security numbers.
  • Offers of free money with no documentation required.
  • Unsolicited offers to prepare a return and split the refund.

  These refund schemes feature many of the warning signs IRS cautions taxpayers to watch for when choosing a tax preparer. For advice on choosing a competent tax professional, see Tips for Choosing a Tax Return Preparer on IRS.gov. To get the facts on tax benefits related to education, go to the Tax Benefits for Education Information Center on IRS.gov. 

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