IRS issues warning about fake college credits

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in Small Business Tax,Small Business Tax Deduction Strategies

The IRS is warning taxpayers about an emerging scam. (IRS Internal News Release IR-2012-29)

Alert: Under the scheme, promoters claim they can obtain a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit (AOTC), even if the victim went to school decades ago. The con is often aimed at senior citizens like your parents or in-laws.

One variation incorrectly claims the AOTC is available to compensate people for paying taxes on groceries.

The IRS says taxpayers should beware of any of the following:

  • Fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.
  • 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.
  • Homemade fliers and brochures implying credits or refunds are 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 economic stimulus payments.
  • Unsolicited offers to prepare a return and split the refund.
  • Unfamiliar return preparation firms soliciting business from cities outside of the normal business or commuting area.

Tip: The warning signs are similar to the ones the IRS cautions taxpayers to watch for when choosing a tax preparer.

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