IRS Tax Tip 2018-52, April 4, 2018
The IRS reminds taxpayers to watch out for scams and schemes that put them and their personal information at risk. Each year, the IRS releases the top 12 scams, known as the Dirty Dozen. The schemes run the gamut from simple refund inflation to technical tax shelter deals.
Here’s a recap of this year's Dirty Dozen:
- Phishing: Taxpayers should watch for fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on links in these emails claiming to be from the IRS.
- Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers.
- Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities. The IRS continues to pursue criminals who file fraudulent tax returns using someone else’s Social Security number.
- Return Preparer Fraud: Most tax professionals provide honest, high-quality service. However, there are some dishonest preparers who scam clients. These preparers commit refund fraud, identity theft and other scams that hurt taxpayers.
- Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. People making donations should take a few extra minutes to make sure their money goes to legitimate charities.
- Inflated Refund Claims: Taxpayers should be wary of anyone promising inflated tax refunds. Some signs of this include preparers who ask clients to sign a blank return or those who promise a big refund before looking at taxpayer records.
- Excessive Claims for Business Credits: Taxpayers should avoid improperly claiming the fuel tax credit. Most taxpayers aren’t eligible for this credit, as the law usually limits it to off-highway business use, including farming.
- Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns. Taxpayers do this to pay less than what they owe or receive a larger refund than they should get.
- Falsifying Income to Claim Credits: Con artists may convince taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit.
- Frivolous Tax Arguments: Some taxpayers use frivolous tax arguments to avoid paying tax. Promoters of these schemes encourage taxpayers to make outlandish claims about the legality of paying taxes. These claims are repeatedly thrown out in court.
- Abusive Tax Shelters: Taxpayers who use abusive tax structures do so to avoid paying taxes. The 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.
- Offshore Tax Avoidance: It’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by voluntarily disclosing offshore money and getting caught up on their tax-filing responsibilities.