WASHINGTON (AP) — The Internal Revenue Service is warning taxpayers about a scam in which people falsely are led to believe they can deduct from their income taxes money they have paid into Social Security through payroll taxes.
The IRS already has blocked 1,100 such refund claims around the country, totaling about $95 million, officials said Wednesday. Total income tax refunds paid out through Feb. 26 have reached $43.5 billion.
In the scam, a taxpayer is charged a “paperwork” fee of $100 plus a percentage of any refund received by someone who then prepares a return claiming lifetime Social Security payroll taxes as a deduction.
“This is nothing more than a hoax designed to fleece the victims for the upfront fee,” said Ted Brown, IRS assistant commissioner for criminal investigation. “The law does not allow such a refund of Social Security taxes paid, and the IRS will contact taxpayers filing these claims.”
Brown said taxpayers should question anyone who offers to prepare a return for a percentage of the refund or charges a fee that seems unusual.