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Spot the Dirty Dozen tax scams

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in Small Business Tax

The IRS has issued its annual list of the “Dirty Dozen” tax scams.

Strategy: Try to avoid these items. They can land you in hot tax water. The list for 2018 is similar to past years. Here’s a roundup.

1. Phishing: Watch out for potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund.

2. Phone scams: Phone calls from criminals impersonating IRS agents remain a threat. They may threaten taxpayers with police arrest, deportation and license revocation, among other things.

3. Identity theft: Be alert to tactics aimed at stealing your identity. The IRS continues to pursue criminals filing fraudulent tax returns with someone else’s Social Security number.

4. Return preparer fraud: Look out for unscrupulous return preparers. Caveat: The vast majority of tax professionals provide honest, high-quality service.

5. Fake charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations.

6. Inflated refund claims: Take note of anyone promising inflated tax refunds. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high.

7. Excessive claims for business credits: Don’t improperly claim the fuel tax credit, a tax benefit generally not available to most taxpayers. Avoid misuse of the research credit.

8. Falsely padding deductions on returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns. Think twice before doing this.

9. Falsifying income to claim credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit.

10. Frivolous tax arguments: Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying tax. The penalty for filing a frivolous tax return is $5,000.

11. Abusive tax shelters: Abusive tax structures are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes.

12. Offshore tax avoidance: People involved in offshore tax avoidance are best served by voluntarily getting caught up on their tax-filing responsibilities.

Tip: For more information, visit www.irs.gov.

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