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Tax Scam Victims tend to be Senior citizens and low-income individuals

WASHINGTON, March 20, 2012 /PRNewswire-USNewswire/ --Every year during tax season, scammers find new ways to steal money from taxpayers. In response, every year the Internal Revenue Service (IRS) publishes a list of common scams to help taxpayers avoid fraud.

This year the IRS is warning about a scam that promises fake tax refunds and targets senior citizens and low-income individuals. The agency says that in recent weeks this scam has been increasingly reported across the country.

Scam Offers Free Money

Scam artists promise tax refunds which are supposedly part of The American Opportunity Tax Credit, originally designed to help people with college expenses. They claim incorrectly that the refund is available, even if the person attended college decades ago.

In a twist, they are also telling victims that they can benefit from this credit if they even paid taxes on groceries while attending college.

The IRS says scam artists have been looking for potential victims at church gatherings and are targeting senior citizens and people with little or no income who don't usually have to file taxes.

Victims Pay a High Cost

People who fall for these scams have a lot to lose.

For starters, they pay high fees for bogus tax preparing services. And when they figure out they have been scammed, criminals usually have already disappeared with their money.

"This is a disgraceful effort by scam artists to take advantage of people by giving them false hopes of a nonexistent refund," said IRS Commissioner Doug Shulman in a statement. "We want to warn innocent taxpayers about this new scheme before more people get trapped."

By law, taxpayers are legally responsible for the accuracy of their tax returns. If the IRS issues a refund by mistake, taxpayers are obligated to return the refund.

How to Protect Yourself

Unfortunately for many, tax season is also scams season. Warning signs of tax scams include:

•          Promises of refunds based on false statements.

•          Unfamiliar companies that sell refunds or credits to members of local churches.

•          Internet ads or emails with toll-free numbers. When people call, they are asked for their Social Security number.

•          Homemade flyers and brochures offering or implying credits or refunds to people who are not eligible.

•          Offers of free money without requiring documentation.

•          Promises of refunds for "Low Income – No Documents Tax Returns."

•          Unsolicited offers to prepare a return and split the refund.

How to get help

The IRS website has lots of resources. It includes links to forms and publications, information on how to file taxes online and instructions on how to arrange payment plans and installment agreements.

You can also call the IRS directly at 1 (800) 829-1040.