As tax season reaches its peak, the Internal Revenue Service (IRS) has issued its annual list of “Dirty Dozen” tax scams.
Some of the frauds on the government’s list are examples of how taxpayers are being preyed upon, such as email phishing attempts or identity theft. Others are ways Americans are cheating on their returns, such as inflating refund claims or padding deductions.
“Taxpayers need to guard against ploys to steal their personal information,” the IRS says in a statement announcing the list. “And they should be wary of shady promoters trying to scam them out of money or talk them into engaging in questionable tax schemes.”
Although scamming is most popular as tax day — April 17 this year — approaches, the IRS advises taxpayers to be on the lookout throughout the year.
Hiya Inc., which monitors phone scamming, says on its blog that “from calls threatening to take legal action, sending arrest warrants, filing lawsuits, and requesting financial and personal information, Hiya still sees the oldest tricks in the book trending in 2018.”
Here are the Dirty Dozen list’s scams against taxpayers:
- Phishing: You should watch for potential fake emails or websites seeking personal information. The IRS will never send you an email about a bill or tax refund. Don’t click on a message claiming to be from the IRS.
- Phone Scams: Scammers who impersonate IRS agents are an ongoing threat. Some con artists who use this ploy have threatened taxpayers with deportation, arrest and revocation of their licenses if they fail to follow the scammers' instructions.
- Identity Theft: You should guard against possible identity theft. While the IRS has worked to better detect tax-return related identity theft, it reminds taxpayers that they can help in preventing this crime by protecting their personal data.
- Tax-Return Preparer Fraud: Watch out for unscrupulous tax-return preparers. The vast majority of tax professionals are honest. But some dishonest preparers scam clients, perpetuating refund fraud, identity theft and other scams that hurt taxpayers.
- Fake Charities: Groups posing as charitable organizations solicit donations. Some of these groups use names similar to nationally known organizations to deceive consumers. The status of charities can be checked using tools found at IRS.gov.
- Inflated Refund Claims: Taxpayers should be wary of anyone promising inflated refunds. If a tax preparer asks you to sign a blank return, promises you a big refund before looking at your records, or charges fees based on a percentage of your refund, they are probably up to no good.
The Dirty Dozen list also includes these ways taxpayers are cheating the IRS, sometimes with a little help from con artists:
- Excessive Claims for Business Credits: Don’t improperly claim the fuel tax credit. Taxpayers also should avoid misuse of the research credit. The IRS tends to closely scrutinize the use of these credits.
- Padding Deductions: You should avoid the temptation to illegally inflate deductions like charitable gifts.
- Falsifying Income to Claim Credits: Con artists may persuade unsuspecting taxpayers to invent income to wrongly qualify for tax credits, like the Earned Income Tax Credit.
- Frivolous Tax Arguments: Some schemes urge taxpayers to make unreasonable and outlandish claims. Those who file a frivolous tax return face a possible penalty of $5,000.
- Phony Tax Shelters: The IRS says it is committed to cracking down on complex tax-avoidance schemes and the people who create and sell them. Be on the lookout for fraudsters promoting tax shelters that sound too good to be true.
- Offshore Tax Avoidance: It’s a bad bet to hide money and income in offshore accounts because the IRS has had lots of success in thwarting these schemes.
AARP’s Fraud Watch Network can help you avoid and learn more about scams and frauds.