Tax and Scams - Generations Magazine - February-March 2013This time of year, fliers, yard signs, emails and other advertisements offering tax preparation assistance and promising bigger, faster refunds are popping up everywhere. When you alone are ultimately responsible for the information on
your tax returns, how do you separate the professionals from the scammers? Over the past few years seniors have become prime targets of the tax scammers.

One popular scheme works by convincing seniors that they qualify for reimbursement through the American Opportunity Tax Credit (AOTC). The AOTC allows people paying for college to reduce their taxable income by as much as $2,500.

A key requirement of the AOTC is that a person be currently enrolled in an institute of higher education — a condition that most seniors do not meet. But, scammers lie, telling seniors that they can collect benefits even if they went to school many years ago or even if they helped pay for their children’s schooling.

Here is a list of some of other recent tax related scams:

  • Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
  • Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling an IRS-payout.
  • Unfamiliar for-profit tax services teaming with local churches.
  • Homemade fliers or brochures implying credits or refunds available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income — No Documents Tax Returns.”
  • Claims for the expired Economic Recovery Credit Program or for the Recovery Rebate Credit.
  • Senior stimulus payment. Retirees and other Social Security beneficiaries are eligible for a senior stimulus payment — $250 for individuals and $500 for couples — as part of the new stimulus plan. Some scams claim seniors can get a second, much larger payment by calling a telephone number and surrendering personal information.

Hawaii’s BBB offers the following tips for avoiding tax preparation scams:

  • Be cautious of tax preparers who claim they can get larger refunds than other preparers, or who base their fee on a percentage of your refund.
    Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
  • Check the preparer`s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS
    in all matters including audits, collections and appeals.
  • Find out if the preparer is affiliated with a professional organization that provides its members with continuing educational resources and holds them to a code of ethics.
  • Ask friends and family if they know of people who has used the tax preparer before, and whether they were satisfied with their service.
  • Check out the firm with Hawaii’s Better Business Bureau at

Keep your money and your identity safe this tax season. And remember the IRS provides free telephone assistance for people who have questions at 1-800-829-1040.

Better Business Bureau - Generations Magazine - April-May 2013