Q: My mother has been living on Social Security for several years, and hasn’t paid taxes since then, but she was recently approached by someone who said she can get a tax refund based on the American Opportunity Tax Credit. Might this be true?
A: Your mother should be on guard against tax scams promoted by individuals trying to persuade people to file false returns. Generally, for those age 65 and over, the 2012 income thresholds for filing were $11,200 (single), $13,950 (head of household), $16,850 (qualifying widow/er) and $21,800 (joint - both spouses 65+). The IRS has recently identified a scam involving bogus refund claims coming in from across the United States.
Q: How can my mother tell if this is a scam?
A: Typically, these con artists falsely claim that refunds are available through the American Opportunity Tax Credit. This credit, which expanded and renamed the already-existing Hope scholarship credit, can be claimed for expenses paid for tuition, certain fees and course materials for higher education after 2008. If someone claims that your mother qualifies for such a credit, even though she went to college decades ago, it is likely a scam. Those involved in this scheme may charge exorbitant upfront fees to file such bogus claims and are often long gone when their victims discover they have been scammed.
Q: How can my mother avoid such scams in the future?
A: To avoid becoming ensnared in this scheme, the IRS recommends that 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 a toll-free number and then solicit Social Security numbers;
• Homemade flyers 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 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.
Q: What should my mother do if she is approached by someone she suspects may be a scam promoter?
A: If she is approached by someone she suspects may be a scam promoter, she should contact the local IRS Taxpayer Assistance Center. Also, if she has questions about tax credits or refunds, she should visit the IRS website at www.IRS.gov or call the IRS toll-free number at 1-800-829-1040.
The information for this “Law You Can Use” column was provided by the IRS. It was prepared by the Ohio State Bar Association.