IRS Releases This Year’s “Dirty Dozen” List of Tax Scams

As the end of tax season draws near, the IRS would like to keep taxpayers informed of this year’s most common scams.  Although they can occur at any time during the year, tax scams peak around this time as last minute filers prepare their returns.  Many of the scams listed involve some form of identity theft, so be careful with your personal information! Here’s a quick overview of what you should look for:

1)      Identity Theft: Someone else files a return with your information to claim a fraudulent refund.

2)      Phishing: The use of unsolicited email or fake websites to lure taxpayers into giving up personal information that can be used to commit identity or financial theft.

3)      Return Preparer Fraud: Dishonest tax preparers can steal your information.

4)      Offshore Accounts: The use of undisclosed accounts to hide assets and avoid US taxes.

5)      “Free Money from the IRS!”: Aimed at low income earners, these scammers will charge high fees to encourage filers to falsify information or claim credits that either don’t exist or they clearly don’t qualify for.  By the time the taxpayer finds out their claim has been rejected, the preparer is long gone with their fees.

6)      Impersonating a Charitable Organization: In the wake of a natural disaster, scammers may attempt to solicit funds from unsuspecting donors.  They may also contact victims directly in an effort to help them file a fraudulent casualty loss claim.

7)      False/Inflated Income and Expenses: A common form of fraud intended to decrease tax liability, increase refunds or claim undeserved credits.

8)      False Form 1099 Refund Claims: Scammers get taxpayers to give up information based on the incorrect theory that the US government keeps secret accounts for taxpayers and that they can get access to the accounts by filing a 1099-OID form.

9)      Frivolous Arguments: The use of outlandish arguments to justify not paying taxes.  Check out some of them here : http://www.irs.gov/Tax-Professionals/The-Truth-About-Frivolous-Tax-Arguments-Section-I

10)   Falsely Claiming Zero Wages: Filing a phony information return to lower the amount of taxes owed.

11)   Disguised Corporate Ownership: Using methods to obscure the true ownership of a business to underreport income, claim fictitious deductions, avoid filing returns, or facilitate money laundering and financial crimes.

12)   Misuse of Trusts: Using trusts to hide income or assets to avoid tax liability.

Be aware and happy filing!

This entry was posted in Tax Law and tagged dirty dozen, income tax, IRS, tax fraud, tax scams on by Sean Malin.

About Sean Malin

Sean Malin is an Associate Attorney with Colby & Associates. His work focuses on personal finances issues such as estate planning, foreclosure, and bankruptcy. He can be reached at [email protected]