Information is one of the most effective ways to combat tax scams. If taxpayers know the methods tax scammers use to operate, they are less likely to be victimized. In an effort to spread awareness about tax scams, the IRS issues the “Dirty Dozen” tax scams list every year. For 2015, the top 5 tax scams that taxpayers should be aware of are:
1. Phone Scams
The IRS phone scams remains an ongoing threat to taxpayers. This has quickly became one of the biggest tax scams in the country. Scammers make unsolicited phone calls to taxpayers, demanding payment of back taxes. They use intimidation such as threatening police action, deportation, license revocation, etc. to get taxpayers to transfer them money that they claim is owed for back taxes.
Scammers use fake webpages and websites to steal taxpayers’ information. They lead people to fake sites by sending unsolicited emails pretending to be from the IRS, a bank or some other well-known institution. It’s important to remember that the IRS sends notices in the mail about tax payments, refunds, etc., not emails.
Identity theft is one of the biggest tax scams in the country. Scammers send out scam emails, text messages, social media messages, and make phone calls to people to steal their personal and tax information. Taxpayers should not share their personal information on any platform without confirming the other person’s identity.
4. Return Preparer Fraud
Unscrupulous return preparers falsify information on their clients’ tax return to pocket huge refunds. Taxpayers should check the information on their return before filing, get their refund to their bank account or their home residence (and not the return preparer’s), and check the Personal Tax Identification Number (PTIN) of the tax preparer.
5. Offshore Tax Avoidance
Hiding income overseas to avoid paying taxes in the U.S. is a criminal offense. Taxpayers that have hidden income and assets overseas can gain back compliance by using the Offshore Voluntary Disclosure Program (OVDP).
Along with these, the other tax scams that taxpayers should protect themselves against are: inflated refund claims, fake charities, hiding income using fake documents, abusive tax shelters, falsifying income to claim credits, excessive claims for fuel tax credits, and frivolous arguments.