Law

Column: Don't get fooled by Indian tax scam

Thursday, March 1, 2007

"Every year the Internal Revenue Service announces the top 12 tax scams. This tax season, topping the latest Dirty Dozen are fraudulent schemes connected with the one-time telephone excise tax refund available to most taxpayers.

This year's Dirty Dozen list features five new scams. You can get the full list by going to IRS.gov. Here are a few that caught my attention:

American Indian Employment Credit. This scam reminds me of a scheme in which African Americans were persuaded they were entitled to a slavery tax credit. Thousands of African Americans were duped into filing for refunds for a nonexistent 'slave reparations' tax credit. Now the schemers are moving on to Native Americans, who are encouraged to submit returns claiming their taxable income should be reduced because of an American Indian employment or treaty credit. It's a lie. It might sound believable because there is an Indian Employment Credit. The intent of this credit is to give businesses an incentive to hire certain individuals who live on or near an Indian reservation. This credit is available for businesses that employ Native Americans or their spouses. In a somewhat similar scam, unscrupulous promoters have informed Native Americans that they are not subject to federal income taxation."

Get the Story:
Michelle Singletary: Don't Get Pulled In by Tax Scams (The Washington Post 3/1)
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Internal Revenue Code, Title 26:
SUBPART D--BUSINESS RELATED CREDITS [For Section 45A] | PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS [For Section 168j]

Former Reservations in Oklahoma:
Notice 98-45 (Internal Revenue Service)