The Internal Revenue Service recently presented its list of the 2015 “Dirty Dozen” list of tax scams with a warning to taxpayers about aggressive telephone scams continuing coast-to-coast. Scam artists use flyers, advertisements, phony storefronts and word of mouth via community groups and churches to seek victims. Scams are especially common during tax filing season, but can occur any time of the year.
“We are doing everything we can to help taxpayers avoid scams as the tax season continues,” said IRS Commissioner John Koskinen. “Whether it’s a phone scam or scheme to steal a taxpayer’s identity, there are simple steps to take to help stop these con artists. We urge taxpayers to visit IRS.gov for more information and to be wary of these dozen tax scams.”
The list below represents the list of this year’s “Dirty Dozen” tax-related scams:
Aggressive and threatening phone calls by scam artists posing as IRS agents remain an ongoing threat to taxpayers. There has been a surge of these scams — threatening arrest, deportation, license revocation and other adverse consequences. The IRS reminds taxpayers that the IRS will never solicit personal information by email or by phone calls not initiated by taxpayers.
The IRS never sends taxpayers unsolicited emails or refunds. If you receive such a message; it is almost certainly a scam. Taxpayers should be wary of clicking links contained in strange emails and websites. They may be attempts to steal your personal information.
Attempts at identity theft are especially common during tax filing season. A common tactic is filing fraudulent returns using someone else’s Social Security number. The IRS aggressively pursues identity theft attempts, but taxpayers must also practice due diligence in protecting their information.
Return Preparer Fraud
Return preparers are a vital part of the U.S. tax system. About 60% of taxpayers use tax professionals to prepare their returns. Although the vast majority of tax professionals provide honest high-quality service, dishonest preparers set up shop each filing season to perpetrate refund fraud, identity theft and other scams. Taxpayers must be wary of such bad actors.
Offshore Tax Avoidance
As the recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows, it’s a losing bet to attempt to shelter income and assets offshore. Taxpayers are best served by taking advantage of the IRS Offshore Voluntary Disclosure Program (OVDP) to get their federal income tax affairs in order.
Inflated Refund Claims
Taxpayers should be wary of preparers promising inflated refunds — especially before looking at their financial records, and refuse to sign blank returns. Taxpayers should also be wary of preparers who charge fees based on a percentage of the refund. For more information on selecting paid tax preparers, see the Choosing a Tax Professional page on IRS.gov.
Especially during the holiday season, taxpayers should be on guard against fake charitable organizations. Check out the group to ensure that hard-earned cash isn’t filtered into a sham operation BEFORE making a contribution. IRS.gov has tools taxpayers need to check out the status of charitable organizations. Be especially wary of charities with names that are similar to familiar or nationally known organizations.
Hiding Income with Fake Documents
The mere suggestion by paid preparers that taxpayers should falsify to reduce tax bills or inflate tax refunds is a huge red flag. The IRS reminds taxpayers who might be tempted to allow paid preparers to cut corners that they are legally responsible their returns regardless of who prepares them.
Abusive Tax Shelters
While the vast majority of taxpayers voluntarily pay their fair share, the IRS is committed to stopping abusive tax shelters and prosecuting the people who create and sell them. Taxpayers should be wary for tax breaks that sound too good to be true. When in doubt, seek an independent opinion regarding questionable offers before making a commitment.
Falsifying Income to Claim Credits
Unscrupulous tax preparers sometimes persuade otherwise honest taxpayers to artificially inflate their income to erroneously claim tax credits. While taxpayers are entitled to take advantage of all legal tax breaks, avoiding questionable credits and deductions is the best policy in the long run. If the IRS discovers a discrepancy, the taxpayer is legally responsible, even if someone else preparedthe return.
Excessive Claims for Fuel Tax Credits
Unlike the mileage tax credit, the fuel tax credit is generally limited to off-highway business use, including use in farming. Consequently, the credit is not available to most taxpayers. Nonetheless, the IRS routinely encounters unscrupulous preparers who have enticed sizable groups of taxpayers to erroneously claim fuel tax credits to inflate their refunds.
Frivolous Tax Arguments
Taxpayers are entitled to present legitimate disputes about tax liabilities. However, despite routinely being thrown out of court, there are unscrupulous taxpayers who insist on making outlandish claims to avoid paying taxes they rightfully owe. The IRS reminds taxpayers who are tempted to file frivolous returns that the penalty for doing so is $5,000. Additional information about tax scams is available on IRS social media sites, including YouTube and Tumblr, where people can search “scam” to find scam-related posts.
Illegal scams can lead to significant penalties and interest for taxpayers, as well as possible criminal prosecution. Taxpayers should also remember that they are legally responsible for the content of their tax returns even if they are prepared by someone else. The IRS Criminal Investigation division works closely with the Department of Justice to prosecute criminals who perpetrate tax scams.