Each year the IRS announces “Dirty Dozen Tax Scams” they encounter regarding frivolous tax arguments and fraud. While six of the “scams” are related to, “don’t cheat we have our eyes on you,” the other six are scams that all of us should be on guard to detect.
Identity theft. Identity theft tops the list of the dirty dozen this year. This reflects a truly bad year for the IRS. Three times in the past twelve months the IRS has acknowledged the theft of 100,000’s of taxpayer’s private information. Thankfully, the IRS is taking precautionary measures to curtail this huge problem. In addition to limiting the number of direct deposits it will make to any single account, the IRS is working with states and tax preparation software vendors to put more controls in place. This includes some states requiring drivers license numbers on their tax forms, delays in early processing of tax refunds, internal tracking within software programs, and continual checking for heavy filing activity. There are taxpayer single use tax id’s attached to tax returns that have had identity problems. Here is a link to the IRS identity protection page should you wish to know more. IRS Identity Protection: Prevention, Detection and Victim Assistance
Phone scams. Phone calls from thieves representing themselves as IRS agents continues to get more sophisticated. These thieves often have some of your personal information. The caller ID may show as coming from the IRS and the scam may involve numerous phone calls instead of a single contact. How would you react if someone threatened you with jail time, deportation or license revocation? Remember, never give information over the phone to someone claiming to be from the IRS when they call. Phishing. This recurring scam involves receiving fake emails and creating websites that look like the real deal. The IRS will not send you billing information or refund information via email. Do not click on any link from an email received from the IRS unless you requested it. Remember the IRS does not initiate contact through emails. Return preparer fraud. In conjunction with Identity Theft, many temporary tax preparation offices set up shop and generate fraudulent tax returns. These folks often file a return using stolen information, create refund fraud and other scams that leave you holding the tax obligation when caught. Offshore accounts. The IRS has taken many enforcement actions in this area after breaking the long-standing secrecy wall of Swiss bank accounts. If you have money in foreign accounts, you must understand the reporting requirements or you could be subject to substantial fines. Fake charities. After major disasters, many charitable givers are scammed into making donations to fake charities. In addition, new IRS charitable organization reporting requirements are not being followed by many organizations. This makes donations to them non-deductible. To protect against this, prior to donating funds make sure the charity is both legitimate and deemed a qualified charity by the IRS. Other scams. The other six scams that round out the IRS list include; inflated refund claims, falsely padding deductions, excessive business credit claims, falsifying income to claim credits, abusive tax shelters, and frivolous tax arguments.

If you wish to know more, the IRS has posted information on these scams on their web site,www.irs.gov. Simply click on the News and Events tab.