By Staff
The Internal Revenue Service is warning of a tax scam targeting the elderly and others in Alabama.
People are encouraged to be wary if anyone approaches them about filing for a tax refund by somehow using Social Security retirement or disability benefit amounts, said IRS spokesman Dan Boone. Senior citizens and others may be targeted directly by the scam artists or may be encouraged to participate in the scam by citizens who innocently believe it to be legitimate.
Retirement or disability benefits received generally cannot be used to generate a legal tax refund, according to the IRS. Any such claim filed with the IRS may result in civil or criminal penalties.
Here's what to watch for: The scam artists usually offer, for a fee, to prepare tax returns reporting part or all of your Social Security benefits as taxable income. They may falsely claim some percentage of the benefits as tax withholding or claim the Earned Income Tax Credit, thereby generating a refund.
The scammers often prepare as many as three years worth of false refund claims per person or couple. The victim then files the fraudulent tax returns and may even erroneously receive a refund from the IRS.
However, even if the IRS issues the requested refund, it will demand the money back with interest and perhaps a penalty. By that time, the scam artist has moved on and the victim is out the fees they paid to prepare the false returns.
If you have been a victim of this scam, you should immediately: