The IRS recently warned taxpayers to become more conscious of a variety tax scams con artist use to prey on victims this tax season. While the IRS does all it can to protect people from these types of scams, it is important that citizens are aware they exist and the importance of reporting any suspected fraudsters. Tax scams can result in lost money, unpaid taxes and IRS penalities. Among the ‘Dirty Dozen’, the yearly list of the most common scams, here are some of the most common ways swindlers steal.
Identify Theft
Identity theft tops the 2013 Dirty Dozen list. Con artists typical will use an unsuspecting taxpayer’s personal information to file a false tax return in hopes of claiming a refund. People who have recently lost any identifying documents could be at risk. This is such a large problem that the IRS has a special section dedicated to this type of crime.
Phishing Scams
A phishing scam occurs when a victim receives an email from what he believes is from a legitimate source, but in fact, it is from a scammer. The email may pretend sent from a bank or the IRS. Once the person enters his personal information the criminal can use the information for many types of financial fraud. The IRS does not contact taxpayers by email to ask for personal information, either do most banks. If you think you have received a phishing scam you can contact the IRS at phishing@irs.gov.
‘Free’ Money From the IRS Scams
Con artists often advertise that they can teach people how to receive ‘free’ money from the IRS by making fictitious claims. These types of scams are often advertised in low-income communities and claim that, for a fee, people who take these course can learn ‘secrets’ that will let them get bigger tax refunds. Not only will these types of claims be denied by the government, taxpayers who knowingly make these types of claims may pay fines of $5000.
Misuse of Trusts Scams
Scammers sometimes try to sell trusts by claiming that certain trusts can lower the tax liability for taxpayers. While trust can have legitimate uses, often trusts are a way to avoid paying taxes that are due. The IRS is vigilant in locating and prosecuting people who use trusts for these purposes. If you want to make a trust agreement, be sure to get the advice of a trusted professional to avoid creating tax problems later.
Fake Charity Scams
Several large natural disasters this year has increased the number of phony charities asking for contributions. Taxpayers who donate to a charity which is not tax exempt, cannot legally claim a tax deduction for their charitable donation. Be on the look out for charities that have names similar, but not exactly the same, as well-known organizations, It is a good idea to check with the IRS tax exempt organization website, before donating.
Frivolous Arguments
Some con artists promote information on using frivolous arguments to lower a taxpayer’s burden. Frivolous arguments run the gamut from it is legal to avoid paying tax on religious or moral grounds to paying taxes is voluntary. Many scammers charge for this faulty information. Check the frivolous argument website for more information.
Most people hate paying taxes, but everyone hates being scammed. Stay safe this tax season.
Sources: http://www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013
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