When I first came across this article, I thought it dealt solely with the most common scams that taxpayers try to perpetrate against the IRS. Quite the contrary. The comprehensive list of the 12 most common tax scams include those proliferated against taxpayers.
The so called "Dirty Dozen" cover a wide range of tactics, and can be employed at any time of year, though they are most common during the peak of filing times.
- Identity Theft-- criminals will attempt to use a legitimate tax payer's information to file a return and secure a fraudulent refund.
- Phishing-- as with other phishing scams, fraudulent emails or websites attempt to solicit secure information, so that the criminal will then have all the information they need to commit identity theft.
- Return Preparer Fraud--these fraudsters will scam clients in various ways, which include "skimming" refunds, charging inflated fees, or promising guaranteed or inflated refunds.
- Hiding Income Offshore--this relates to U.S. taxpayers attempting to hide funds in offshore bank accounts in order to avoid taxes. Hiding assets can carry a criminal penalty, which is why the IRS has reopened the Offshore Voluntary Disclosure Program (OVDP), which allows taxpayers to come forward about offshore assets.
- “Free Money” from the IRS & Tax Scams Involving Social Security-- various schemes include people charging inflated prices to file returns with limited information, or claim that people are entitled to "refunds" from Social Security.
- False/Inflated Income and Expenses-- claiming inflated expenses or income in order to maximize tax refunds could result in the taxpayer having to repay the erroneous refunds, including interest and penalties, and in some cases even prosecution.
- False Form 1099 Refund Claims--in this scheme, the perpetrator issues a false 1099 to justify a false refund claim on a corresponding tax return.
- Frivolous Arguments-- these include arguments such as the collection of taxes constituting a taking under the Due Process clause, or being unconstitutionally apportioned, etc. Further information about why these arguments do not absolve tax liability can be found here.
- Falsely Claiming Zero Wages-- fairly straightforward, fraudsters attempt to correct filings to reflect zero wages when they really do have taxable income.
- Abuse of Charitable Organizations and Deductions-- these include situations where donors maintain ownership of the "donated" assets, claim inflated deductible values, or enter into some sort of repurchase agreement.
- Disguised Corporate Ownership-- these schemes use legal entities to obscure business ownership, and facilitate financial crimes such as money laundering, underreporting income, claiming fictitious deductions, avoid filing returns, etc.
- Misuse of Trusts-- individuals may transfer funds into trusts in an attempt to hide income, reduce taxable income, or take deductions for personal expenses.
If you happen to have fallen prey to any of these scams, or if you are accused of committing these scams, an experienced Tax Attorney can help you navigate your communications with the IRS. From the moment you first receive a written notice from the IRS, you can assume that any action you take or do not take, or any statements you make are being collected as evidence in your case. Consult an experienced Tax Attorney about your case today.
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