The IRS “Dirty Dozen” list

| March 23, 2015

Mike's Blog

The IRS released their top tax scams for 2015. These Illegal scams cause serious financial penalties and interest for you the taxpayer, and potentially jail time! Always remember that you the taxpayer are legally responsible for what is on your tax return even if prepared by someone else. There’s a lot of quality CPAs and accountants out there. Make sure you hire a good one.

Here are this year's "Dirty Dozen" tax scams:

  1. Frivolous Tax Arguments: Making outlandish claims to avoid paying taxes. The penalty for filing a frivolous tax return is $5,000.
  2. Excessive Claims for Fuel Tax Credits: This is generally limited to off-highway business use, including farming. Obviously this credit is not for most people, yet, somehow there seems to be a lot of farmers around tax time. The IRS is really watching this! You know who you are!
  3. Falsifying Income to Claim Credits: Can you say “incarceration”? Does this one even require an explanation?
  4. Abusive Tax Shelters: These usually involve complex tax schemes. Most of us are responsible and we pay the taxes we owe and it’s ok to try and reduce your taxes. But avoid getting caught up with people peddling tax shelters that sound too good to be true. When in doubt, get another opinion.
  5. Hiding Income with Fake Documents: Filing false Form 1099s or other fake documents is a scam that taxpayers should always avoid and guard against.
  6. Fake Charities: Watch out for groups pretending to be a charitable organization whose goal is to get your money. Take the time to ensure your money goes to a legitimate charity. You can go to the IRS website for tools to check out the status of charitable organizations.
  7. Inflated Refund Claims: Be on the lookout for anyone promising big, inflated refunds. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking their victims.
  8. Offshore Tax Avoidance: This is when you try to hide money and income offshore. The IRS has been successfully enforcing the rules against this.
  9. Tax Return Preparer Fraud: While the vast majority of tax preparers are ethical, you still need to avoid unscrupulous tax return preparers. About 60 percent of taxpayers use tax professionals to prepare their returns.
  10. Identity Theft: Taxpayers need to watch out for identity theft especially at tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. The IRS is making progress on this front but taxpayers still need to be extremely careful and do everything they can to avoid becoming a victim.
  11. Phishing: Watch out for fake emails pretending to be from the IRS, as well as websites looking to steal your personal information. The IRS will not send you an email about a bill or refund out of the blue. Don’t click on any email claiming to be from the IRS. Avoid strange emails and websites altogether! They may be scams to steal your personal information.
  12. PHONE SCAMS! The age old and timeless Phone Scam is still unfortunately alive and well: Aggressive and threatening phone calls by crooks impersonating IRS agents remain an ongoing threat to all of us! There has been a spike in these phone scams recently as scammers threaten police arrest, deportation, license revocation and lots of other nasty threats!

The IRS continues to remind taxpayers to be on watch for all sorts of con games that arise during any filing season.

Being aware of the different kinds of scams can help you avoid being a victim. If you are in doubt, it never hurts to get a second opinion.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.