The Internal Revenue Service is warning senior citizens and other taxpayers to beware of an emerging scheme tempting them to file tax returns claiming fraudulent refunds.  The theme of this scheme promises refunds to people who have little or no income and normally don’t have a filing requirement.  The promoters of this scheme claim that they can obtain for their victims, often senior citizens, a tax refund or nonexistent stimulas payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.

According to an IRS newswire, “in recent weeks the IRS has identified and stopped an upsurge of these bogus refund claims coming in from across the United States. The IRS is actively investigating the sources of the scheme, and its promoters may be subject to criminal prosecution. 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. “We want to warn innocent taxpayers about this new scheme before more people get trapped.”

The promoters falsely claim that refunds are available even if the victim went to school decades ago. In many cases, senior citizens, people with very low incomes and members of church congregations are targeted with bogus promises of free money.

The IRS has also seen a variation of this scheme that incorrectly claims the college credit is available to compensate people for paying taxes on groceries.

Although thousands of these fraudulent claims have been stopped this scheme can still be quite costly for victims. Promoters may charge exorbitant upfront fees to file these claims and are often long gone when victims discover they’ve been scammed.

WARNING: All taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error.  The bottom line is if it sounds too good to be true, it probably is.  You can’t earn $50,000 per year and think you are entitled to a $30,000 refund.

To get the facts on tax benefits related to education, go to the Tax Benefits for Education Information Center on

Below are some tips from the IRS

To avoid becoming ensnared in this scheme, the IRS says 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 toll-free numbers 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 or 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.