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HSFPP Weekly Update # 145—Tax Refund Scams

Message from Bob and Chris: With tax season approaching, this is a good time for parents to teach teens about the income tax; teens who work part-time or who had summer jobs can fill out their own tax returns with some guidance from their parents. They should know what information is on their W-4 and how tax forms are filled out. It is also important for parents and educators to teach teens that some things in life are inevitable, taxes being one of them, and that not paying taxes can get them in big trouble. It can damage their credit rating and result in fines or even jail time. For this reason, if for no other, it is simply not worth cheating on taxes.

Because cheating on taxes is an ethical, as well as legal issue, you might want to revisit ethical issues covered in previous updates; cheating by students and teachers, for instance. One approach to this ethical issue would be to address people’s responsibilities to each other, in this case as fellow citizens. What do we owe to each other that our taxes provide?

 

Related Updates:

Update #132 - Cheating - 12 September 2005
Update #80 - Teenagers and Taxes - 26 January 2004
Update #70 - Tax and Identity Fraud Scams - 20 October 2003

 

Web Site Pick of the Week:

http://www.irs.gov/

The Internal Revenue Service Web site provides a wealth of information, including what’s new, questions and answers, forms, and how to file online.

 

Notes to Educators:

Have students read this week’s article In the New$...; then ask them the discussion questions below. We also provide writing activities for history and English classes.

 

Discussion Questions:

1.) Why are taxes necessary?

 

2.) Which issues deserve more tax support than others? Which deserve less? Why? (Examples for discussion could include health care, Social Security, education, environmental issues, and other social programs.)

3.) According to the article in Update # 80 (Update #80 - Teenagers and Taxes - 26 January    2004), 71% of teens thought taxes were too high. Should we cut federal funding for education? Yes ___   No ___. Why do you feel this way?

What about road repairs? Yes ___   No ___. Why?

School loans? Yes ___   No ___. Why?

National security? Yes ___   No ___. Why?

 

4.) If you answered “No” to all categories in Question 3, what do you think we should cut? What other items should government help fund (i.e., national health insurance)?

 

5.) What areas of tax policy should be changed?

 

Follow-up Activity:

History / Social Studies class: Research the history of taxes in the U.S. and write a short essay on the subject. Areas to be considered include: the Founding Fathers’ intentions on taxes and tax collection; various types of taxes; how taxes have changed over the years; how attitudes toward taxes have changed; when the income tax began and what its effect has been; effect on farmers and small businesses; tax fairness based on income (regressive vs. progressive taxes); Social Security tax; tax exemptions; complexity of taxes and tax law; debate over a flat tax; and what the future might hold.

English class: Write a research paper on the fairness of taxes. Be sure to include various sides on all issues involved and weigh the evidence. The paper should be three pages plus endnotes and bibliography with at least three sources. Only one encyclopedia may be used. At least one source must be current (no more than one year old).

 

In the New$... Tax Refund Scams

Teenagers’ taxes are almost always relatively simple; most teens can use the short form or file their tax return over the phone. For most teens, a paid tax preparer is unnecessary and a needless expense. However, teens and other taxpayers need to be aware of tax refund scams.

A page on the IRS Web site says, “The Internal Revenue Service [recently] issued a consumer alert about an Internet scam in which consumers receive an e-mail informing them of a tax refund. The e-mail, which claims to be from the IRS, directs the consumer to a link that requests personal information, such as Social Security number and credit card information.

“This scheme is an attempt to trick the e-mail recipients into disclosing their personal and financial data. The practice is called ‘phishing’ for information.” The purpose of the scam is to steal your identity.

According to Sophos, an antivirus software protection company, the problem is caused by a security configuration error on the IRS site that enables criminals to divert you to their site. [See www.eweek.com article below.]

Again, from the IRS Web site: “The bogus e-mail, which claims to come from ‘tax-refunds@irs.gov’ tells the recipient that he or she is eligible to receive a tax refund for a given amount. It then says that, to access a form for the tax refund, the recipient must use a link contained in the e-mail. The link then asks for the personal and financial information.

“The IRS does not ask for personal identifying or financial information via unsolicited e-mail. Additionally, taxpayers do not have to complete a special form to obtain a refund.

“If you receive an unsolicited e-mail purporting to be from the IRS, take the following steps:

• “Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
• “Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you about a tax refund.”

Source: Adapted from “IRS Warns of e-Mail Scam about Tax Refunds.” Nov. 30, 2005.
http://www.irs.gov/newsroom/article/0,,id=151065,00.html
and “Tax Scam Preys on Refund-Hungry Public with Real Gov Site,” Nov. 30, 2005. http://www.eweek.com/print_article2/0,1217,a=166452,00.asp

Kentucky High School Financial Planning Program
http://www.ca.uky.edu/fcs/hsfp
The purpose of the HSFPP weekly financial updates and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP and the weekly updates meet Kentucky core concepts. The Web site and weekly updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.