Beware of tax-return promises

September 4, 2011 at 12:00a.m.

Summer is clearly not a time when most people are thinking about their income taxes — which is a good thing.

But tax season is never-ending when it comes to tax scams — especially for those on the economic fringe.

The latest warning: Run for cover this summer or fall if someone at your church or your mom or dad’s senior home pops on the scene and offers to help file a return by saying “Get free money! It’s yours!”

Or did you hear about some special “stimulus program” for seniors or others who don’t typically need to file a federal tax return? Again, you don’t want to be fooled by a phony preparer offering that deal. Now or ever.

Phony tax preparers prey on seniors and disabled people.

This summer, phony tax preparers have been conning seniors, people with disabilities and others by using church groups and community centers as cover to look genuine.

Here’s the scam hitting the Midwest: These fake preparers open up shop at a church or other gathering spot and target poor and elderly taxpayers who receive public assistance or Social Security benefits and would not ordinarily file returns.

The fake preparers persuade their victims to file a federal return — often for a fee — to receive a sizable tax refund or so-called tax rebate that is based on Social Security benefits.

But most people do not have a withholding from their Social Security benefits — as some of the scam operators suggest, according to IRS spokesman Luis Garcia.

“The return is false, and honest people can be out hundreds of dollars and may subject themselves to penalties and interest charges,” Garcia said.

What’s unsettling is that scam artists have used well-meaning church pastors and senior center employees to get a foot in the door. Word-of-mouth endorsements from friends fuel the scam, too.

One sign that someone is churning out crooked 1040s is a promise of a special stimulus or Social Security-related tax refund — and the claim that the filer needs no documentation.

Some victims could be out a fee of $200 or $300. In some cases, claims are rejected and scam operators are long gone.

Others later could risk losing some government benefits because a fake tax return was filed and claimed earned income that is so inflated a person couldn’t qualify for some benefits.

And there’s always the possibility that the Social Security number could be used for identity theft.

The scam appears to be running in waves — like bad driveway repair crews going door-to-door and later moving to a new town.

The tax scam has been reported in Ohio, Maryland, Indiana, Pennsylvania and Wisconsin.

The Maryland Comptroller’s Office warned consumers about one group of fake tax preparers who claim to be from Human Services LLC, supposedly based in Lansing.

But my co-worker Dawson Bell in the Detroit Free Press Lansing bureau checked the 2007-08 Lansing phonebook and the 2010-11 edition. No such listing or anything close.

Someone who had a 2009 Lansing phone book looked up the name and couldn’t find it, either. I tried online services — as well as directory assistance.

Ohio Attorney General Mike DeWine warned in early June that his office had received more than 50 complaints from Northeast Ohio consumers who were being promised money from a “special stimulus program” from the IRS.

But they were not eligible for money. DeWine said that individuals who received a prepaid debit card as part of the “special stimulus program” should not cash the card or spend any money on it, because the refund is not legitimate.

Yes, some people do see checks or prepaid debit cards of $1,000 or more after the bad returns are filed. The checks or plastic debit cards can arrive with a business card to give to a friend and the promise of a referral bonus.

Individuals should not let someone prepare and file a return if they don’t see the final document. Some of these returns are filed electronically and people never see the completed return.

If a taxpayer is scammed, regulators warn that you should immediately file IRS Form 14039 Identity Theft Affidavit. The form is available at www.irs.gov.

Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stomporfreepress.com.

2011, Detroit Free Press

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