WASHINGTON (KRLD) — The IRS released its annual “Dirty Dozen” list of tax scams on Tuesday, reminding taxpayers to exercise caution as tax season sets in. The list includes the most common scams that taxpayers might encounter at anytime during the year.
TaxMama’s Eva Rosenberg joined KRLD live to talk about how taxpayers can protect themselves.
Though the IRS Criminal Investigation team works closely with the Department of Justice to shutdown and prosecute scammers, a number of scam artists still prey on vulnerable individuals.
The following are the Dirty Dozen tax scams for 2013:
- Identity Theft: This occurs when someone uses your personal information to commit fraud or fraudulently file a tax return. The IRS has a dedicated section for identity theft issues.
- Phishing: Usually carried out with unsolicited emails or fake websites, prompting people to provide personal and valuable financial information. Remember, the IRS will not request personal information by electronic communications.
- Return Preparer Fraud: Some tax preparers prey on unsuspecting taxpayers. Choose your preparer carefully, because you are ultimately resp0nsible for what’s on your return — even if you didn’t prepare it.
- Hiding Income Offshore: While there are legitimate reasons for maintaining financial accounts overseas, U.S. taxpayers must properly report them. Forgetting to do so can bring tax evasion charges.
- “Free Money” Scams: Scammers prey on low income people, the elderly, and members of church congregations by promising free money from the IRS. Don’t believe it.
- Impersonation of Charities: Following major disasters, scammers commonly impersonate charities — often preying on disaster victims themselves.
- False Income & Expenses: Filing inflated incomes and expenses to maximize refunds is a common scam. This could result in repaying erroneous refunds – with interest and penalties – and possible prosecution.
- False 1099 Refund Claims: Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled to. And don’t let anyone use your info to do so.
- Frivolous Arguments: The IRS has a list of frivolous tax arguments that taxpayers use to avoid paying taxes they owe. Avoid these.
- Falsely Claiming Zero Wages: Using a Form 4852 or a “corrected” Form 1099 as a way to improperly reduce taxable income to zero.
- Disguised Corporate Ownership: Third parties are sometimes used to obscure the true ownership of a business – lessening their reported income and increasing deductions.
- Misuse of Trusts: Transferring funds to a trust rarely delivers the tax benefits promised. This is usually a way to avoid tax liability and hide funds from the IRS.
To find out more information about the “Dirty Dozen”, visit the IRS website.
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