Every year the U.S. Internal Revenue Service (IRS) warns taxpayers of tax-related scams and reminds people to be careful about who and how they share personal information. Many fraudsters like to prey on people with tax-related schemes in hopes they can ensnare someone to fall for their tricks.
The annual list, called the “The Dirty Dozen”, lists the top frauds trending in any given year. While scammers target people with these schemes throughout the year, there is reportedly a spike during tax time when people are perhaps more vulnerable due to the pressing tax day on April 15.
“This tax season, the IRS has stepped up its efforts to protect taxpayers from a wide range of schemes, including moving aggressively to combat identity theft and refund fraud,” said IRS Acting Commissioner Steven T. Miller in a press release. “The Dirty Dozen list shows that scams come in many forms during filing season. Don’t let a scam artist steal from you or talk you into doing something you will regret later.”
On March 26, 2013, the IRS released its list of top tax-related scams for the current year. Without further ado, here they are:
• Identity theft
Top of this year’s list, identity theft is unfortunately a reality of today’s society. Thieves often use taxpayer information to either collect refunds not due to them or try and steal tax information in order to commit theft. The IRS says it is employing strategies to better protect taxpayers. For more information on tax-related identity theft, more information can be found on IRS.gov.
• Phishing
A common social engineering method employed in many ways by scammers, phishermen also like to gear their schemes towards tax topics. The IRS warns taxpayers receiving unsolicited emails from IRS or the Electronic Federal Tax Payment System (EFTPS), it should be reported to phishing@irs.gov.
• Return preparer fraud
The IRS warns that some scammers present themselves as legitimate tax preparers. The tax agency warns that all preparers should sign the returns and include their PTIN, the number assigned to legitimate tax preparers.
• Unreported offshore accounts
The IRS reminds that people are still obligated to report any interest income they receive in accounts located outside the U.S. Tax evasion and non-reporting is considered a serious offense.
• “Free money” scams
Scammers will try to prey on the vulnerability of people by presenting “free money” opportunities such as fake stimulus programs or tax credits. Often low income and elderly people are targeted. With this one, if something sounds too good to be true, keep mind that it probably is.
• Fake charities
Another classic tax fraud is when scammers present themselves as a charity, but in reality the only giving they are doing lining their own pockets with taxpayer monies. Scammers often pretend to be collecting for disaster victims or other people in need, promising tax deductions. They may also phish for taxpayer information in order to use to commit identity or financial theft. The IRS warns the public to beware of any charity, sometimes fraudsters “spoof” a real charity and try to capitalize off their name using a similar one; always check out any charitable cause before giving money.
Rounding out the “Dirty Dozen” are false/inflated income and expenses, false form 1099 refund claims, frivolous arguments, misuse of trusts, disguised corporate ownership and falsely claiming zero wages.
Tax fraud is a serious issue for both victims and perpetrators. Protect yourself and follow the rules and you can avoid becoming a statistic in the IRS’ “Dirty Dozen” scams.