Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Be careful to avoid the following 12 most common schemes:
- Offshore Tax Avoidance — Avoiding taxes by hiding money or assets in unreported offshore accounts.
- Frivolous Tax Arguments — The IRS warned taxpayers against using frivolous tax arguments to avoid paying taxes. romoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.
- Abusive Tax Shelters — For the third consecutive year, the IRS places abusive micro-captive insurance tax shelters on the “Dirty Dozen” list. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.
- Falsifying Income Scam — The IRS warned taxpayers to avoid schemes to erroneously claim tax credits.
- Falsely Padding Deductions on Returns — Avoid the temptation to falsely inflate deductions or expenses on tax returns, the IRS warned. Doing so may result in paying less than is owed or receiving a larger refund than is due.
- Excessive Claims for Business Credits — The IRS warned that taxpayers should watch for improper claims for business credits.
- Inflating Refund Claims — The IRS warned taxpayers to be alert to unscrupulous tax return preparers touting inflated tax refunds.
- Fake Charities – Taxpayers were alerted by the IRS about groups masquerading as charitable organizations to attract donations from unsuspecting contributors.
- Return Preparer Fraud — The IRS warned taxpayers to be on the lookout for unscrupulous return preparers, one of the most common “Dirty Dozen” tax scams during tax season.
- Identity Theft — The IRS issued a filing season alert, warning taxpayers and tax professionals to watch out for identity theft.
- Phone Scams — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers.
- Phishing Schemes — Watch out for fake emails or websites looking to steal personal information.
Taxpayers need to guard against ploys to steal their personal information, scam them out of money or talk them into engaging in questionable behavior with their taxes. Perpetrators of illegal schemes can face significant fines and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them. Taxpayers should keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else. Be sure the preparer is up to the task of preparing your tax return properly.
This article was provided by the IRS website (www.irs.gov).
