The Internal
Revenue Service issues a list of the top 12 tax scams each year – known
as the Dirty Dozen. The scams are illegal and can lead to problems for
taxpayers including significant penalties, interest and possible criminal
prosecution. These scams don’t just happen during the tax filing season,
they can happen anytime during the year. Here are five scams from the 2010
Dirty Dozen list every taxpayer should be aware of this summer.
1. Phishing Phishing is a tactic used by scam artists to
trick unsuspecting victims into revealing personal or financial information in
an electronic communication. Scams can take the form of e-mails, tweets or
phony websites and they try to mislead consumers by telling them they are
entitled to a tax refund from the IRS and they must reveal personal information
to claim it. Regardless of how official this e-mail may look and sound, the IRS
never initiates unsolicited e-mail contact with taxpayers about their tax
issues. Phishers use the personal information obtained to steal the
victim’s identity, access bank accounts, run up credit card charges or
apply for loans in the victim’s name. If you receive an e-mail that you
suspect is a phishing attempt or directs you to an imitation IRS website,
please forward it to the IRS at phishing@irs.gov.
You can also visit IRS.gov and enter the keyword phishing for additional
information.
2. Return Preparer Fraud Dishonest tax return
preparers can cause trouble for taxpayers who fall victim to their ploys. Such
preparers are skimming a portion of their clients’ refunds, charging
inflated fees for tax preparation or are attracting new clients by promising
refunds that are too good to be true. To increase confidence in the tax system,
the IRS is requiring all paid return preparers to register with the IRS, pass competency
tests and attend continuing education.
3. Hiding Income Offshore Taxpayers have tried
to avoid or evade U.S. income tax by hiding income in offshore banks and
brokerage accounts. IRS agents continue to develop their investigations of
these offshore tax avoidance transactions using information gained from more
than 14,700 voluntary disclosures received last year. Taxpayers also evade
taxes by using offshore debit cards, credit cards, wire transfers, foreign
trusts, employee-leasing schemes, private annuities or life insurance plans.
4. Abuse of Charitable Organizations and Deductions The IRS continues to
observe the misuse of tax-exempt organizations. This includes arrangements to
improperly shield income or assets from taxation and attempts by donors to maintain
control over donated assets. The IRS also continues to investigate various
schemes where donations are highly overvalued or the organization receiving the
donation promises that the donor can purchase the items back at a later date at
a price the donor sets.
5. Frivolous Arguments Promoters of
frivolous schemes encourage people to make unreasonable and outlandish claims
to avoid paying the taxes they owe. If a scheme seems too good to be true, it
probably is. The IRS has a list of frivolous legal positions that taxpayers
should avoid on IRS.gov. These arguments are false and have been thrown out of
court.
For the full
list of 2010 Dirty Dozen tax scams or to find out how to report suspected tax
fraud, visit IRS.gov.
