The Top 12 Common Types of Scams For Taxpayers

It seems like there is always a new scam out there that the government is warning taxpayers about. This year, the IRS released a list of the Top 12 Most Common Type of Scams you will come into contact with. Each scam has its own way of getting you to either give money or enough personal information that they can steal your identity. It’s important to always be vigilante and be wary of unknown email addresses or strange phone numbers you don’t know. Here is the list of the 12 most common scams to be on the look for.

• Phishing– Taxpayers should be on the lookout for fake emails or websites that are trying to steal people’s personal information. The IRS will never contact you through email about a bill or tax refund. If you receive an email it is important to avoid clicking on the links provided in the email as this may expose you and your computer to theft.

• Phone Scams– Every year, one of the most common scams is criminals trying to impersonate IRS agents using phone calls. If you receive a phone call and question if it is a scam, remember that the IRS will never threaten to bring the police to your home if you don’t pay immediately, call you about an unexpected refund or ask for credit or debit card numbers over the phone.

• Identity Theft– Criminals will try to steal taxpayer’s social security numbers and file their tax return in hopes that they can cash in on your refund. Always use security software along with strong passwords and encrypt sensitive tax records to ensure you are as protected as possible. The IRS urges taxpayers to treat their personal information like cash and never leave it lying around.

• Return Preparer Fraud– Taxpayers should be careful when choosing a tax professional to help file their returns because some preparers commit refund fraud or other scams to hurt taxpayers. To avoid this problem, ask your tax preparer for their IRS Preparer Tax Identification Number (PTIN). All paid tax return preparers are required to register with the IRS in which they will receive a PTIN. The IRS website also offers various tools to verify the credentials of tax return preparers.

• Fake Charities– Groups of people have been working together to create fake charities in attempt to attract donations from taxpayers. Many of these places try to attract you by telling you these donations are tax-deductible but that isn’t always the case. Fake charities will often use a similar name as well-known organizations to try to trick people into donating. The IRS offers a feature where people can see qualified charities in which their donations will actually count towards a tax deduction.

• Inflated Refund Claims– Taxpayers should be hesitant when anyone promises an inflated tax refund. Signs of this could include preparers asking taxpayers to sign blank returns or promising a big refund before looking at your tax records. If you notice any of these signs, try looking elsewhere for a tax preparer because you could be in danger of fraud.

• Excessive Claims for Business Credits– Taxpayers should avoid claiming credits they do not qualify for such as the fuel tax credit. This credit is only eligible for people who partake in off-highway business activities, including farming.

• Falsely Padding Deductions on Returns– Taxpayers will often try to falsely inflate their deductions or expenses on their tax return to avoid paying as much in taxes or to receive a larger refund. If caught, this could result in heavy fines and penalties by the IRS. They may also be subject to criminal prosecution depending on the circumstances.

• Falsifying Income to Claim Credits– People may try to convince taxpayers to lie about income to qualify for credits such as the Earned Income Tax Credit. Taxpayers will usually be caught if they try to attempt this and interest and penalties will be assessed and sometimes even criminal prosecution.

• Frivolous Tax Arguments– Promoters of these types of schemes encourage taxpayers to make wild claims about the legality of paying taxes to avoid having to pay them. These schemes never work and often leave taxpayers facing multiple penalties and late fees.

• Abusive Tax Shelter– People who use abusive tax structures are doing so to try to avoid paying taxes. Some of these scams can be simple such as inflating refunds while others can be complex and elaborate. Many of these schemes are at peak during tax season, so it’s important to be aware and avoid them.
• Offshore Tax Avoidance– Some people try to avoid taxes by putting their money or assets into unreported offshore accounts. Over the past couple of years, the IRS has intensified efforts on handling offshore issues and recommend taxpayers voluntarily disclose offshore money and get caught up on their tax-filing responsibilities to avoid any penalties or fines.

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