It is tax season, and the only way paying taxes is less fun than usual is if you’re victim of a phone scam. The IRS has announced the 2015 “Dirty Dozen” list of scams. The most prominent of these are the phone scams that continue from coast-to-coast.
Phone Scams: Calls by criminals that are impersonating IRS agents. The scam usually includes a threat of police arrest, deportation, license revocation, and other negative consequences. Remember, if you are contacted by the IRS, they will contact you first through the mail.
Phishing: Fake emails or websites that are trying to steal personal information. These fake emails and websites usually look legitimate, and are unsolicited. If you receive an unsolicited email that appears to be from the IRS, report it immediately to firstname.lastname@example.org. The IRS will contact you by mail, usually, before emailing you or contacting you by phone.
Identity Theft: Criminals work to steal your Social Security number to file a tax return claiming a fraudulent refund. To prevent this, be extremely cautious when giving out your Social Security number. Only give it out if it’s absolutely necessary.
Return Preparer Fraud: While the majority of tax professionals provide honest and quality service, you should always be wary of dishonest preparers who are trying to perpetrate refund fraud or other scams that hurt tax payers. To avoid hiring a dishonest tax preparer, check that they have an IRS Preparer Tax Identification Number (PTIN), ask to see their professional credentials, and provide records and receipts.
Offshore Tax Avoidance: Trying to hide money and assets in unreported offshore accounts is a bad idea. Since 2009 there have been more than 50,000 disclosures and more than $7 billion collected from offshore accounts alone.
Inflated Refund Claims: If you are promised a refund by a tax preparer that seems extravagant, chances are it’s a scam. Be cautious of anyone who asks you to sign a blank return or charge fees based on a percentage of your refund.
Fake Charities: When making a donation, do a little extra research to confirm that the charity you are contributing to is legitimate. Illegitimate charities usually have names that are similar to nationally known organizations, or have websites that are very similar to recognized organizations. A legitimate charity will never ask for your Social Security number.
Hiding Income with Fake Documents: Do not file false Form 1099s or other federal forms. Just filing a fake form can result in a $5,000 penalty. If your tax preparer even suggests falsifying a form, find a different professional to complete your taxes.
Abusive Tax Shelters: These tax schemes involve structuring of abusive domestic and foreign trust arrangements into strategies that take advantage of the financial secrecy laws of foreign jurisdictions. These schemes use LLCs, LLPs, International Business Companies, and foreign financial accounts and are usually very complex and have multiple layers.
Falsifying Income to Claim Credits: Do not lie about the amount of income you have earned in order to maximize refundable credits, included the Earned Income Tax Credit.
Excessive Claims for Fuel Tax Credits: The fuel tax credit is generally limited to off-highway business use or use in farming, and is not available to most taxpayers. If the credit does not apply to you, do not attempt to claim the credit!
Frivolous Tax Arguments: The IRS released a 2015 version of “The Truth about Frivolous Tax Arguments” which covers some of the common frivolous tax arguments, including ideas like taxpayers can refuse to pay taxes on religious or moral grounds by invoking the First Amendment. “Taxpayers should be on the lookout for scam artists and scheme promoters peddling outlandish arguments,” says IRS Commissioner John Koskinen.
Remember that you are responsible for the tax return that you submit, regardless of who prepared it. For help choosing a tax professional, visit the Choosing a Tax Professional page.
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These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.