It's tax time, and unfortunately that also means it's the time of year we see a spike in scams that taxpayers may encounter. The IRS releases its Dirty Dozen list each year with a variety of schemes seen during filing season, so read below and beware:
- Identity Theft - When someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes.
- Persuasive Telephone Scams - These phone scams include many variations, including instances where callers say the victims owe money or are entitled to a huge refund.
- Phishing - A scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure potential victims and prompt them to provide valuable personal and financial information.
- False Promises of "Free Money" from Inflated Refunds - Scam artists routinely pose as tax preparers, promising large federal tax refunds or refunds that people never dreamed they were due in the first place.
- Return Preparer Fraud - Some unscrupulous preparers prey on unsuspecting taxpayers and the result can be refund fraud or identity theft.
- Hiding Income Offshore - Evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds.
- Impersonation of Charitable Organizations - Scam artists impersonate charities to get money or private information from well-intentioned taxpayers.
- False Income, Expenses or Exemptions - Inflating or including income on a tax return that was never earned, either as wages or as self-employment income in order to maximize refundable credits.
- Frivolous Arguments - Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe.
- Falsely Claiming Zero Wages or Using False Form 1099 - Filing a phony information return is an illegal way to lower the amount of taxes an individual owes.
- Abusive Tax Structures - Structuring abusive domestic and foreign trust arrangements as sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.
- Misuse of Trusts - Unscrupulous promoters who urge taxpayers to transfer large amounts of assets into trusts.
For more detailed information about these scams and contact information to report such crimes, please click here.