In an advisory issued on July 12, 2011, the Internal Revenue Service cautioned taxpayers against fraudulent tax preparer claims.  The advisory notes the steep increase in the number of tax returns being filed with IRS where either a return was not required or the refund claims are frivolous.  The victims of these schemes seem to be mostly of lower income or older age groups who are targeted by advertisements and flyers claiming a number of different tax refund scenarios.  IRS urges the taxpayers to be wary of the following:

• Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
• Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
• Unfamiliar for-profit tax services teaming up with local churches.
• Home-made 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 or Recovery Rebate Credit.
• Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

 A typical scam involves the victim taxpayer being approached by a tax preparer through a home-made flyer or brochure and that claim the tax payer would be entitled to refunds which are either not available or inapplicable.  With the belief they will receive the amounts reflected on returns prepared by these scam artists, the victims pay preparers, only to later find that the IRS denies their refund claims.  Another scenario involves those who are below the income levels necessitating the filing of a tax return being approached by scam artists and being charged for a service they do not need.

For more information, visit http://www.irs.gov/newsroom/article/0,,id=241789,00.html