Dirty Dozen Tax Scams to Watch For
Every year the IRS releases its list of tax scams, spotlighting some ways that people try to separate you from your money.
The 2016 “Dirty Dozen”
Identity Theft
Using your individual information, an identity thief can file a fake tax return and claim a refund. If you’ve been a victim of stolen personal information, you can contact the IRS so the agency can protect your tax account.
Phishing
Be wary of fabricated emails or websites looking to steal your personal information. If you receive a request for information that appears to be from the IRS, contact the IRS directly to verify the request.
Telephone Scams
Scammers will contact you pretending to be from the IRS. They may say that you are due a large refund or owe. If you receive such a call, call the IRS and contact the Federal Trade Commission using their “FTC Complaint Assistant” at FTC.gov.
Promises of “Free Money”
Posing as tax preparers, scam artists may promise huge tax refunds and charge big fees, while filing false returns with big refunds payable to them. Individuals may never know a tax filing was ever made in their name.
Return Preparer Fraud
Dishonest preparers may use tax preparation as an excuse to steal your personal information, so only use a preparer who signs the return and has an IRS Preparer Tax Identification Number.
Hiding Income Offshore
The IRS has intensified its ability to identify offshore holdings, and the failure to report them will be costly.
Impersonation of Charitable Organizations
Deceitful charities raise money or obtain private information from individuals looking to help. Donate only to recognized charities and beware of charities whose names sound similar to the well-known ones.
False Income, Expenses or Exemptions
Faking your tax return is a high risk, low reward exercise, especially in this age of Big Data.
Frivolous Arguments
Ignore promoters of frivolous arguments that promise you tax relief. Not only are they expected to fail, but you may be subjected to penalties and jail time.
Falsely Padding Deductions or Returns
Dishonestly reporting deductions to reduce tax bills or inflate refunds may open you up to penalties and prosecution.
Abusive Tax Structures
If someone is proposing to eliminate or substantially reduce your taxes through complex tax structures, walk away—they may be offering nothing more than illegal tax evasion.
Excessive Claims for Business Tax Credits
This happens when taxpayers or their tax preparers improperly claim the research credit or the fuel tax credit, which is generally limited to off-highway uses, such as farming.
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