IRS Issues List Of “Dirty Dozen” Scams Taxpayers Should Be On The Lookout For This Year
Each tax season fraudsters manage to separate taxpayers from billions of dollars by using aggressive schemes such as impersonating Internal Revenue Service agents or employing emails and websites designed to gather consumers’ personal information for fraudulent use. This year, the IRS has issued a list of the “Dirty Dozen” scams consumers should guard against.
The “Dirty Dozen” scams identified by the IRS cover a variety of tactics known to be used by fraudsters including phone calls impersonating tax officials, identity theft attempts, fake charities and offshore tax avoidance schemes.
Unsurprisingly the top scam identified by the agency involves aggressive phone calls by scammers impersonating IRS agents.
Such calls have been the focus of many consumer complaints recently. Back in January, the IRS said that in the last 15 months alone, the agency had received more than 290,000 reports of the scam.
Just last week, Consumerist reported on an incident in which Safeway employees prevented a Washington woman from falling victim to the scam, which involved a caller threatening arrest if the woman didn’t immediately pay purported back taxes.
As was the case in Washington, these scams often involve threats of police arrest, deportation and license revocation if the targeted individual does not provide an immediate payment.
As always, the IRS reminds consumers that if the agency believes you owe it money, you will get a bill in the mail. The agency will not call you and tell you that you need to pay ASAP, nor will they ask you for credit or debit card information over the phone. The IRS also will not threaten to have you arrested for lack of payment.
Another top scheme the IRS highlighted this week involves the use of phishing emails and websites developed specifically to steal taxpayers’ personal information.
The agency reminds consumers that it will not send emails about a bill or refund out of the blue and that people should avoid clicking on surprise emails or websites claiming to be from the IRS.
The IRS says that illegal scams such as phishing emails and aggressive phone calls can lead to significant issues for consumers, including penalties and interest, as well as possible criminal prosecution.
“We are doing everything we can to help taxpayers avoid scams as the tax season continues,” IRS Commissioner John Koskinen said in a statement. “Whether it’s a phone scam or scheme to steal a taxpayer’s identity, there are simple steps to take to help stop these con artists. We urge taxpayers to visit IRS.gov for more information and to be wary of these dozen tax scams.”
The remaining “Dirty Dozen” scams the agency highlighted this year include:
• Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order. The IRS offers the Offshore Voluntary Disclosure Program (OVDP) to help people get their taxes in order.
• Inflated Refund Claims: Taxpayers need to be on the lookout for anyone promising inflated refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking victims.
• Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally known organizations.
• Hiding Income with Fake Documents: Hiding taxable income by filing false Form 1099s or other fake documents is a scam that taxpayers should always avoid and guard against. The mere suggestion of falsifying documents to reduce tax bills or inflate tax refunds is a huge red flag when using a paid tax return preparer. Taxpayers are legally responsible for what is on their returns regardless of who prepares the returns.
• Abusive Tax Shelters: Taxpayers should avoid using abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.
• Falsifying Income to Claim Credits: Taxpayers should avoid inventing income to erroneously claim tax credits. Taxpayers are sometimes talked into doing this by scam artists. Taxpayers are best served by filing the most-accurate return possible because they are legally responsible for what is on their return.
• Excessive Claims for Fuel Tax Credits: Taxpayers need to avoid improper claims for fuel tax credits. The fuel tax credit is generally limited to off-highway business use, including use in farming. Consequently, the credit is not available to most taxpayers. But yet, the IRS routinely finds unscrupulous preparers who have enticed sizable groups of taxpayers to erroneously claim the credit to inflate their refunds.
• Frivolous Tax Arguments: Taxpayers should avoid using frivolous tax arguments to avoid paying their taxes. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.
IRS Completes the “Dirty Dozen” Tax Scams for 2015 [Internal Revenue Service]
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