We are deep in tax season right now, and there are many reports each week of people falling victim to tax scams. In an effort to inform the public and reduce the number of victims, the Internal Revenue Service (IRS) has released a list: “The IRS Dirty Dozen” tax scams.
Here is the list:
Phone Scams:
If you are called by someone claiming to work for the IRS, be very skeptical. The IRS will not call you about any matter without first sending you a letter to notify you. Scammers will impersonate IRS agents and may try to scare you with threats of arrest, penalties, deportation, and so on. Hang up and call the IRS on your own if you are worried about it.
Phishing:
Phishing happens year-round when people try to get your personal information by fooling you via fake (but seemingly real) emails or websites. You might, for example, get an email that really seems like it is from a delivery company, asking you to click on a link for information about a delivery. Phishing happens at tax time, too, such as via a fake email inviting you to click a link for information about money due to you. Beware because the IRS does not initiate contact with you via email.
Identity Theft:
This one will take you by surprise when you file your tax return. You expect a refund, only to find out that someone else, using your Social Security number and probably some other identifying information, has filed a return in your name and has claimed your refund.
Tax Return Preparer Fraud:
There are thousands of tax preparers out there who would love to prepare and file your return for you. Most of them are honest, but some are not. These scammers might engage in identity theft and other kinds of tax fraud. Remember that even when someone else prepares your tax return (and most taxpayers these days do use a preparer), you are the one ultimately responsible for what is on your tax return.
Offshore Tax Avoidance:
If you are trying to hide income and other funds outside the country, you are breaking the law. A better strategy is to come clean to the IRS, perhaps through its Offshore Voluntary Disclosure Program (OVDP). Otherwise, the IRS may come to you and assess high penalties and interest.
Inflated Refund Claims:
This scam is one you might spot on flyers or ads, where you are promised a big tax refund by people who do not even know anything about you. These operators might ask you to sign a blank tax return that they will then fill out for you. Or, they might charge you steep fees, explaining that the fees are a small percentage of your refund.
Fake Charities:
This one is particularly cruel, as it preys on our good natures. It is when scammers set up fake charities to tug on our heartstrings and solicit donations. Many times, they will bear a name that sounds very much like the ones you are familiar with. Always look closely and do a little digging before sending any money. It is often best to find and research the charities on your own.
Hiding Income With Fake Documents:
The 1099 forms we include with our tax returns reporting various income should be legitimate. Do not try to file a fake one that reports less income, and do not let any tax preparer do that for you. Remember this IRS warning: “Taxpayers are legally responsible for what is on their returns regardless of who prepares the returns.” Organizations that send you 1099 forms also send the same information to the IRS.
Abusive Tax Shelters:
Avoid tax shelters and tax-avoidance schemes. If it sounds too good to be true, it probably is — and it is probably illegal, too.
Falsifying Income To Claim Credits:
If you knowingly or unknowingly misstate your income in order to claim some tax credits, rethink that decision. That can get you in big trouble with the IRS, including high penalties.
Excessive Claims For Fuel Tax Credits:
Some bad tax preparers might try to talk you into improperly claiming fuel tax credits — ones that are generally not applicable to most taxpayers. The IRS is on the lookout for these ploys.
Frivolous Tax Arguments:
Finally, do not fall for any arguments that you do not have to pay your taxes. Those who have tried that argument in court have failed. You can dispute what, exactly, you owe, but you cannot get out of being responsible for taxes you owe. The IRS reminds us that the penalty for filing a frivolous tax return is $5,000.
If you have any questions, please feel free to contact JV LAW GROUP, our Tax Attorneys are here to help!
