Beware the scams of April when filing your taxes, the Internal Revenue Service warns.
The IRS recently issued its annual “Dirty Dozen” list of tax scams that alert taxpayers to protect themselves against a wide range of schemes when filing their taxes. “Scams come in many forms during filing season,” noted IRS Acting Commissioner Steven T. Miller in a statement. “Don’t let a scam artist steal from you or talk you into doing something you will regret later.”
What do the IRS consider the most insidious tax scams?
1. Identity theft once again tops the list. Identity theft occurs when someone uses your personal information, such as your name, Social Security number or other identifying information without permission to commit fraud or other crimes. There has been an alarming rise in the number of ideneity thieves who use a legitamite taxpayer’s identity to fraudulently file a tax return and claim a refund. The IRS is on the case. Last year, it prevented the issuance of $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion the previous year.
2. Phishing solicits financial information through an unsolicited email or a phony website posing as a legitimate site. The IRS does not initiate contact with taxpayers by email to request personal or financial information. To report receipt of an unsolicited email that purports to be from the IRS, send it to phishing@irs.gov.
3. Return preparer fraud. Taxpayers are legally responsible for what’s on their return when they file their taxes. About 60 percent will use tax professionals this year, the IRS figures. Most provide honest service, but some prey on unsuspecting taxpayers to commit refund fraud or identity theft. For tips about choosing a preparer, red flags, details on preparer qualifications and other information, visit www.irs.gov/chooseataxpro.
4. Hiding income offshore.There are legitamite reasons for maintaining financial accounts abroad. The IRS becomes interested when those accounts are used to avoid paying taxes.
5. “Free Money from the IRS and Social Security tax scams are all the rage this time of year. Low income individuals, the elderly and church congregations are the primary targets for these bogus promises of free money that arrive in the form of flyers and advertisements. Scammers have also been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates.
6. Impersonation of charitable organizations. This insidious scam preys upon taxpayers’ charitable natures. Scammers impersonate charities to get money or private information in the wake of an actual disaster. Some brazenly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and receive tax refunds. The IRS recommends donating only to recognized charities and to be way of those with names that are similar to those of nationally known organizations
Rounding out the IRS’ Dirty Dozen tax scams are:
7. False/inflated income and expenses
8. False form 1099 refund claims
9. Frivolous argumentsto avoid paying the taxes you owe
10. Falsely claiming zero wages
11. Disguised corporate ownership
12. Misuse of trusts