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Highlights of Six of the IRS “Dirty Dozen” Tax Schemes

On Behalf of | Feb 3, 2015 | IRS |

Each year, the Internal Revenue Service (“IRS”) compiles an annual list of the common scams taxpayers may come across. Such scams tend to peak during filing season as taxpayers are preparing their own returns or hiring someone to prepare it for them. This year, in order to raise consumer awareness, the IRS is releasing one Dirty Dozen scam per day. Here are the first six scams about which the IRS is warning taxpayers:

1. Telephone Scams. Always at the top of the IRS list, criminals impersonating an IRS agent use aggressive threats of police arrest, deportation, license revocation, and other scary acts to get taxpayers to provide personal information on the spot, when the taxpayer is off guard. You can identify a scam telephone call by being aware of 5 things the con artist will do, but the IRS does not: (i) call to demand immediate payment, especially without first mailing you a bill, (ii) Demand payment without the opportunity to question or appeal the amount claimed to be owed, (iii) require a specific payment method, such as a prepaid debit card, (iv) ask for credit or debit card numbers over the telephone, and (v) threaten to have the police or other law enforcement involved for not paying. More information about telephone scams can be found here

2. Phishing. Taxpayers need to be aware of fake emails and/or websites looking to gain your personal information. Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft. The IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. More information about Phishing can be found here.

3. Identity Theft. Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. The IRS offers some suggestions for protecting yourself against identity theft: (i) Don’t carry your social security card with you, (ii) Do not give a business you social security number because someone has asked, give it only when required, (iii) check your credit report every 12 months, (iv) protect your personal computer using firewalls and anti-virus software, and (v) Don’t give personal information over the phone, email, or internet unless you have initiated the contact or are sure you know who is receiving the information. More information on Identity Theft can be found here.

4. Return Preparer Fraud. While most tax preparers are honest and well-qualified, some dishonest preparers set up shop each filing season to perpetrate refund fraud, identity theft, and other scams that hurt taxpayers. The IRS has provided several tips to assist taxpayers in choosing a tax preparer.

5. Hiding Money or Income Offshore. While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution. Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them. The IRS Offshore Voluntary Disclosure Program has been reopened to allow taxpayers to disclose their offshore accounts with reduced penalties. At this point, the Program will remain open indefinitely, until a closing date is announced. Click here for more information on Hiding Money or Income Offshore. 

Inflated Refund Claims. Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds or refunds that people never dreamed they were due in the first place. The scammers build false hope by duping people into making claims for fictitious rebates, benefits, or tax credits. Or worse, they file a false return in a person’s name and that person never knows that a refund was paid. Victims lose federal benefits, such as Social Security benefits, certain veteran’s benefits or low-income housing benefits based on the false claims being filed with the IRS that provided false income amounts. Click here for more information on Inflated Refund Claims.



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