As the tax filing deadline looms closer, the IRS has issued its annual list of the “Dirty Dozen
” tax scams. While you may have already taken precautions against fraud after the recent disclosures of major retail consumer data breaches, it is important to be aware of other avenues criminals and scam artists use to access your information.
Identity theft holds the spotlight on this year’s Dirty Dozen list, and for good reason. Citizens are often aware of the possible considerable damage to their credit rating when a criminal accesses personal information to fraudulently open lines of consumer credit. Filing an illegal tax return to claim a refund is another way an identity thief can make use of their victim’s personal information. Fortunately, the IRS has expanded its resources
to protect citizens from identity theft and assist those who find themselves victim of this crime.
Despite greater consumer awareness, telephone and phishing scams are still a viable method for scammers to steal money or personal information from their targets. The criminal on the other end of the phone line or sender of the email may provide an extremely convincing or official sounding message, but it is important to remember one key detail: the IRS does not initiate contact with taxpayers in this manner. Anyone who receives an email or phone call from someone claiming to be with the IRS should refrain from disclosing personal information and contact the IRS directly to verify if there is a tax matter to resolve and to report any fraud attempt.
Many taxpayers receive tremendous benefit by having their tax return prepared by a trusted, qualified professional. This service can provide peace of mind as well as an opportunity for greater education and guidance in managing one’s financial health. Unfortunately, there are those who exploit others’ need for this service by using it as an opportunity to commit identity theft or refund fraud. It is vital to do research when selecting a tax preparer. The IRS offers information
taxpayers can use as a starting point when choosing a professional.
It is also important to remember there are stiff penalties for getting involved in tax scams. There are scams out there with benefits to the taxpayer, but the benefits for filing an illegal return do not outweigh the possibility of losing money, steep tax penalties and interest owed, and even criminal prosecution.
Taxpayers need to keep their distance from actions that may constitute an illegal activity:
Not following regulations on offshore accounts
False income, expenses, and/or exemptions
Frivolous arguments to avoid paying taxes
Falsely claiming zero wages/false Form 1099
Abusive tax structures to evade taxes
Misuse of trusts to hide assets
Ultimately, it is important for citizens to be aware that anything that sounds too good to be true, usually is. Seeking guidance through the IRS, a qualified third party, and other reputable consumer protection agencies are all ways taxpayers can learn more about how to protect their funds as well as their personal information.