The IRS says some of those unscrupulous tax preparers are helping clients file improper telephone tax refund requests. Taxpayers can choose from standard refund amounts, ranging from $30 to $60, or file for the actual amount of taxes paid during the refund eligibility period. Some early 2006 returns, however, show excessively large and apparently improper amounts for the special telephone tax refund. In some cases, taxpayers are seeking a refund for the entire amount of their phone bills, rather than just the 3-percent tax on long-distance and bundled service to which they are entitled.
In cases where tax preparer abuses are suspected, the IRS is aggressively investigating. In mid-February, IRS criminal investigators served search warrants on several tax preparer offices, temporarily closing the businesses and seizing computers and documents. The IRS says additional offices are under investigation, as are individual taxpayers who file questionable phone tax claims.