Consumer Fraud

The INTERNAL REVENUE SERVICE warns taxpayers to be on guard against tax scams that can result in loss of funds and, in some cases, legal difficulties. Some con artists make money at their victims' expense by claiming that they can help to secure tax refunds for their clients. Invariably, the clients must pay a fee up-front. One example of this is a company that claims it can help taxpayers find legal loopholes that will allow them to stop paying taxes. Another is a company that offers to help people submit claims for nonexistent credits. (Some African-Americans have been targeted by a "reparations" scam in which they are told they can apply for a slavery-reparations credit simply by paying a fee. No such credit exists.)

If the taxpayer knowingly engages in a scheme that is illegal (for example, signing up for a new Social Security number), he or she may face fines or imprisonment.