Tax scams that target senior citizens are unfortunately becoming more rampant. It’s estimated that seniors in the U.S. have been tricked out of around $1 billion due to one simple scheme that originated in Jamaica. Here’s how it works: a caller contacts a senior citizen and informs them that they’ve won a lottery or other expensive prize, such as a car. In order to collect their winnings, however, the senior must pay the taxes on the prize first.
In a different version of the scam, callers claim that they’re from the IRS and that the senior citizen owes a huge sum of money that must be paid immediately. Scammers encourage seniors to wire money as soon as possible to avoid being arrested or having their home repossessed. Callers also get information from seniors including bank account numbers and Social Security numbers. In one case, a daughter was shocked to discover that her father had been scammed out of almost $20,000.
One of the most effective ways to prevent an aging loved one from being taken advantage of is to establish powers of attorney with an estate planning lawyer. These documents are ideal for senior citizens that have trouble making decisions for themselves. Through this process, senior citizens can choose a specific person to legally make financial choices for them. They do not have to give up making all of their decisions, however. A power of attorney can be used for limited things such as selling a house or paying medical bills. In the case of the father and daughter, the aging man was not unable to take care of himself; he simply lived alone and was becoming forgetful. This combination unfortunately made him an easy target for criminals.
With scammers getting smarter and more aggressive, it may be best to establish a power of attorney before it’s too late. For example, scammers will use IRS badge numbers and may even be able to set caller IDs to list “IRS” when they call. They also sometimes threaten victims with deportation or bodily harm. Concerned citizens of Colorado should consider legally protecting their aging loved ones before they become victims.
Source: forbes.com, “Tax Scammers Continue To Dial Up Trouble For America’s Seniors” Kelly Phillips Erb, Dec. 09, 2013