The IRS compiles annually a list of its “Dirty Dozen,” the twelve most notorious scams that we typically encounter as taxpayers during peak tax season.
2017 IRS Dirty Dozen
- Phishing: A common scam that involves unsolicited calls, texts, emails and/or websites that pose as legitimate sites, such as banks, and lure you to provide personal and financial information. Read more here. (IR-2017-15)
- Phone Scams: We kicked off our IRS Dirty Dozen blog series last year because of an IRS phone scam. One of our advisors, Roger Ward, received two voicemails purportedly from the “IRS” threatening legal and financial repercussions if he didn’t return their calls. He didn’t. To find out why, read more here. (IR-2017-19)
- Identity Theft: Tax-related identity theft occurs when someone steals your Social Security number and fraudulently files a tax return to claim a refund. Read more here. (IR-2017-22)
- Return Preparer Fraud: How many times do you hear on the news, “He seemed like such a nice guy,” after said nice guy did something horrible? As much as we like to think we know someone, often, our perception is wrong. As consumers, we must do our due diligence when choosing someone to handle our financial information. We cannot just go with our instincts. Read more here. (IR-2017-23)
- Fake Charities: Charitable organizations also require due diligence, because scam artists often create fake charities to steal your money and/or personal information. Read more here. (IR-2017-25)
- Inflated Refund Claims: Since unscrupulous tax preparers make IRS’s Dirty Dozen, it is not too surprising that their ploys might make the list too. Unfortunately, during tax season, these scam artists love to take advantage of tax filers by promising them large refunds for credits and/or benefits that either don’t exist or for which the filer is not eligible. Read more here. (IR-2017-26)
- Excessive Claims for Business Credits: Scammers notoriously abuse fuel tax and research credits; the two most abused business credits. Read more here. (IR-2017-27)
- Falsely Padding Deductions on Returns: Inflated deductions (and expenses) or unentitled credits on tax returns represent another dirty dozen deception. While most taxpayers file accurate returns, some may overstate their charitable contributions, pad their business claims, or erroneously add credits, for which they are ineligible. Read more here. (IR-2017-28)
- Falsifying Income to Claim Credits: While you know that falsifying income on your tax return to claim tax credits isn’t legal, a corrupt tax-preparer won’t necessarily share your commitment to honesty. Read more here. (IR-2017-29)
- Abusive Tax Shelters: An abusive tax shelter is a tax structure, such as a trust or captive insurance, whose sole purpose is to avoid paying taxes. Read more here. (IR-2017-31)
- Frivolous Tax Arguments: Often, taxpayers are convinced by scammers to make unreasonable and outlandish claims to avoid paying taxes. Common arguments to justify refusal to pay taxes include religious or moral grounds by invoking the First Amendment. The IRS rejects these claims and deems them as frivolous. To learn more about these dubious claims, read The Truth About Frivolous Tax Arguments by the IRS. (IR-2017-33)
- Offshore Tax Avoidance: While having money or assets in an offshore account is not illegal per se, using such accounts to evade the IRS is. How do you protect yourself from a scam or scheme involving foreign accounts? Read more here. (IR-2017-35)
If you have any questions about this post or any other tax-related concerns, please don’t hesitate to contact Michael Maiorano, CPA/PFS, CFP®, at firstname.lastname@example.org or 404.487.0505.
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