Unscrupulous tax preparers are using President Obama's health care law as a ploy to pocket bogus fines from unsuspecting taxpayers, including some immigrants not bound by the law's requirements, the IRS warned Friday.
In an advisory, the tax agency said consumers can be sure something is wrong when a tax preparer says they collect the health law fines that may be due the government. The law requires virtually everybody in the country to have coverage or risk fines.
"The payment should never be made directly to an individual or return preparer," the IRS said. "Most people don't owe the (fine) at all because they have health coverage or qualify for a coverage exemption."
Sometimes the con artists promise to lower the purported fine if the consumer pays them directly.
The IRS said it has received reports from around the country that fraudsters are targeting immigrants, particularly Spanish speakers with a limited understanding of English.
In some cases, people who don't owe a fine because they have Medicaid or some other form of health insurance have been told they need to pay anyway, because supposedly they don't have the right kind of coverage.
In other cases, immigrants who are not bound by the law's coverage requirements are being told they must pay a fine.
Young immigrants protected from deportation by the Obama administration fall into a legal gray area that may be prime territory for exploitation.
While they do have authorization to work and therefore pay taxes, they are not considered "lawfully present" for purposes of the health care law. They are not entitled to coverage under the law, and the mandate to get coverage does not apply to them.
The health care law uses the income tax system to subsidize coverage and also to collect fines from people who remain uninsured. This is the first tax-filing season that the connections between health insurance and income taxes are becoming visible to average consumers. Two of the most complicated areas for consumers -- taxes and health care -- are now intertwined.