Dirty Dozen Tax Scams for 2012

With tax season upon us, the IRS reminds taxpayers to use caution to protect themselves against schemes ranging from identity theft to return preparer fraud that peak during tax season. I'll be touching on some of these items in more detail on future posts.  My immediate advise is to file your tax return early and use a reputable tax professional--a CPA, or a well known company like Jackson Hewitt or H&R Block. If you have any doubts or questions about tax returns you filed in the past, it's strongly recommended you seek a second professional opinion to review those returns. No one likes to receive a letter from IRS in the future stating they owe significant monies and penalities.

Dirty Dozen tax scams for 2012 are:
  1.  Identity theft, where thieves try to use a legitimate taxpayer's identity and personal information to file a tax return and claim a fraudulent refund. For more information, visit the special identity theft page at www.IRS.gov/identitytheft.
  2.  Phishing, where an unsolicited email or a fake website that poses as a legitimate site tries to get valuable personal and financial information. The IRS does not contact taxpayers by email to request personal or financial information. Unsolicited emails that appear to be from the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System, should be reported to phishing@irs.gov.
  3. Fraudulent tax preparers profit off of the 60 percent of U.S. taxpayers who enlist tax professionals to file their tax returns. Fraudsters take a percentage of their clients' refunds and charge exorbitant rates. Hold your tax preparer accountable by entering his or her Preparer Tax Identification Number on your returns. Refer to the IRS's Tips For Choosing A Tax Preparer before entrusting someone with your most confidential information.
  4. Hiding income offshore.
  5. “Free money” from the IRS & tax scams involving Social Security, where scammers claim taxpayer can file a tax return with little or no documentation or when scammers promise nonexistent Social Security refunds or rebates.
  6. False or inflated income and expenses, which could result in repaying the erroneous refunds, including interest and penalties, and in some cases, prosecution.  For exmaple, some taxpayers lie about income and expenses in order to qualify for tax breaks such as the Earned Income Tax Credit.
  7. Falsyfing Form 1099 refund claims, where the perpetrator files a fake information tax return to justify a false refund claim on a tax return.
  8. Some taxpayers pick fights with the IRS in order to get out of paying certain taxes. Check out this list of frivolous tax arguments that have been deemed false and have been "thrown out in court."
  9.  Falsely claiming zero wages.
  10.  Abuse of charities and deductions, including arrangements that improperly shield income or assets from taxation and attempts by donors to control donated assets or income from donated property.
  11. Disguised corporate ownership.
  12. Misuse of trusts, where highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes.


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