Each year the IRS publishes a “Dirty Dozen” list of tax-related scams. Here’s the list for 2015.
Update 2/20/2017: For recent tax-related scams view Someone’s claiming I owe money to the IRS. Is this legit?
- Phone scams: Con artists impersonating IRS employees may call you, demanding money or promising a refund if you “confirm” your social security number. Remember – a legitimate IRS call will always be preceded by written correspondence from the Agency.
- Phishing: Thieves commonly use fake emails and websites to steal personal information. Your response: Never click on unfamiliar links or attachments. The IRS won’t email you without first sending a notice to your physical address.
- Identity theft: Your financial identity may be stolen through phone scams, phishing, misuse of information provided to businesses, or dumpster diving. Protect your social security number and other personal information, and avoid providing such data whenever possible.
- Return preparer fraud: Unscrupulous tax preparers may use your information to create inflated refund claims or steal your identity. If a preparer’s representations or demeanor makes you uncomfortable, take your business elsewhere.
- Hiding income offshore: The IRS has been stepping up enforcement actions against undeclared offshore accounts. You’re allowed to maintain such accounts, but you’re required to report them.
- Abusive tax shelters: Abusive shelters use structures ranging from phony entities with no real assets to complex multi-entity conglomerates with offshore accounts. Be careful of investments that emphasize tax avoidance over growth or earnings.
- Inflated refund claims: Avoid return preparers who promise refunds up front, or who base fees on a percentage of your refund. Be sure your refund will be mailed to your address or deposited directly into your bank account.
- Fake charities: Fake charities are used to steal your money, your identity, or both. Use the “Exempt Organizations Select Check” feature at www.irs.gov to determine whether a charity is legitimate.
- Frivolous tax arguments: Beware of anyone who urges you to rely on “innovative” legal theories to justify non-payment of taxes. The Sixteenth Amendment to the U.S. Constitution authorizes Congress to levy an income tax and the tax remains enforceable until Congress repeals it.
- Unwarranted claims for fuel tax credits: Fuel tax credits are generally limited to off-highway business use, such as farming. If you don’t qualify, don’t let anyone talk you into claiming them.
- Fake documents: If a return preparer suggests filing false Forms 1099 or using fake documents for any purpose, walk away.
- Falsifying income to claim credits: This scam involves reporting nonexistent income in order to claim tax credits. This is tax fraud – and you should never agree
