As we close in on another tax return deadline, it’s important to beware of fraud and theft schemes that strike during this time of year. We are usually more responsive and let our guard down to fraudulent inquiries during peak tax season, so be vigilant. Make sure you do not throw any personal, credit or tax information into the garbage after you file your taxes. Do not reply to any emails from the IRS with your social security number or tax information. The IRS does NOT send individual emails to consumers.
Each year the IRS releases a list of typical scams people use to collect fraudulent tax monies. They call it the dirty dozen. The IRS works with the U.S. Department of Justice to identify and shutdown scams. The number-one threat this year is identity theft. After receiving your personal information, a false tax return is filed in your name and they get your refund. Unsolicited emails, or phishing, from IRS-related organizations with a legitimate-looking website such as the Electronic Federal Tax Payment System is often utilized for this purpose.
Tax return preparer fraud is fairly common, as 60 percent of taxpayers will use some sort of tax professional to help them prepare and file their taxes. Preparers have been known to skim off the top of your refund, charge ridiculous fees or encourage you to falsify information. Do not sign any tax return paper without a Preparer Tax ID number on it.
Rounding out the rest of the dirty dozen from the IRS includes: hiding income offshore, false or inflated income and expenses, fake 1099 forms, claiming $0 in wages, abuse of charitable donations and other deductions, disguised corporate ownership and misuse of trusts.
Source: New England Cable News, “Beware of dirty dozen, consumer advocates warn people,” Kristen Doucet, March 26, 2012