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The Dirty Dozen List of Tax Scams (2017 Edition)

The Dirty Dozen List of Tax ScamsIf you don't already know, tax scams are a HUGE business. Every year the IRS publishes a list of the 12 tax-related scams it finds most prevalent. This list is otherwise known as the "Dirty Dozen," a rather clever name coming from an otherwise stuffy IRS. While it doesn't have anything to do with doughnuts, the Dirty Dozen is a helpful list that lets taxpayers know about the schemes they might run into especially during tax season.

If you don't already know, tax scams are a HUGE business. Every year the IRS publishes a list of the 12 tax-related scams it finds most prevalent. This list is otherwise known as the "Dirty Dozen," a rather clever name coming from an otherwise stuffy IRS. While it doesn't have anything to do with doughnuts, the Dirty Dozen is a helpful list that lets taxpayers know about the schemes they might run into especially during tax season.

We know tax time can be stressful and tedious, so don't make it even more so by risking your hard earned money or financial your identity. At The W Tax Group, we want you to have an enjoyable tax season. Ok, it may not be enjoyable exactly, but at least we can help you limit your exposure to malicious tax scams and fraudsters. Don't make these easy to avoid mistakes, and watch out for the 2017 Dirty Dozen tax scams. If you do find yourself the victim of a scam resulting in IRS tax debt, it's a good idea to contact a tax attorney to find the best tax resolution for you.

1. Phishing

Unfortunately this first dirty dozen scam has nothing to do with the well known jam band or aquatic animals. Phishing is when scammers send you fake emails or create fake websites that are meant to steal your personal information, and ultimately your money. You have to be on guard with these kinds of things, and never click on a suspicious looking email from somebody you don't know. Remember that the IRS isn't that hip with the times, and will never contact you via email about tax bills or refunds. So if someone emails you claiming to be the IRS, you can safely know it's either a scammer or someone with an unfortunate name. Either way, never give your personal information, social security number, or credit card information to an unknown email address or website.

2. Phone Scams

Be on the lookout for criminals impersonating IRS agents calling your personal number. A red flag for knowing these phone calls are scams is if the person is threatening you with something like an arrest, deportation or license revocation. While the IRS can be pretty tough and persistent, they're not allowed to threaten you in that manner. If you find yourself in one of these calls, hang up immediately and block the number. Never give out personal information over the phone. If you're not unsure about whether the person you are talking to is actually from the IRS, ask to speak to a manager or supervisor.

3. Identity Theft

Tax time is prime time for criminals to try and steal your identity. Opportunistic tax scammers know you're confused and stressed out from organizing and preparing your taxes which leaves you vulnerable and off your guard. Remember not to share your social security number with people, use it as a password, or have it lying around. The IRS is trying to crackdown on criminals filing tax returns with stolen social security numbers, but you still need to exercise increased and remain vigilant with your identity and personal information during tax time.

4. Return Preparer Fraud

While the majority of tax professionals are honest and legitimate, there are a few who still try their best to scam you. These fraud return preparers convince you that they can get you more money by doing your taxes for you. Not only is this practice unethical, but it ends up hurting both the consumer of tax preparation services as well as the reputation of honest, hardworking tax professionals. Don't let these jerks dupe you, and always make sure your return preparer is certified and trustworthy.

5. Fake Charities

It makes people feel good to spend their hard earned money on a worthy cause instead of another latte. Just make sure you know who you are giving your donations to, and where your money is ultimately going. Scammers love setting up fake charities under names that sound legitimate and often mimic the names of existing organizations. Before you give your information or money to any charity, make sure you do a few minutes of research. Even a quick search on your phone can easily tell you if the charity is legitimate or just trying to take your money. The IRS also has a handy tool for ensuring that the charity you're donating to is legitimate and eligible.

6. Inflated Refund Claims

If someone is promising you an inflated refund, they might as well be promising you a one-eyed unicorn. You should take extra caution to side step prepares who tell you to sign a blank return or promise you a big refund without looking at your records. Another siign to walk out the door is if a preparer tells you they charge a fee based on a percentage of the refund. How can you tell if you're using one of these phony preparers? Well, the first sign is that they often set up shop in fake storefronts.

7. Excessive Claims for Business Credits

A lot of people think they can get away with using the fuel tax credit. The truth is that unless you wear overalls and drive a tractor off-highway for a living, you're probably not eligible for this tax benefit. People who generally receive this credit are farmers, and those with businesses that frequently travel off-highway. Other business credits that people like to claim even though they weren't made for them include the research credit.

8. Falsely Padding Deductions on Returns

You should never lie to the IRS, because much like your mother they always know when they're being lied to. No matter how tempting it may seem, you shouldn't lie about your deductions or expenses on your tax returns so you don't have to pay a lot, or so you receive a bigger refund. Even if you do something as seemingly harmless as making your charitable contributions seem bigger than they actually were, or your business expenses higher than in reality, it will come back to haunt you later down the road. The IRS will always find out, and you'll almost always get in trouble.

9. Lying about Your Income to Claim Credits

Sometimes in life you just have to suck it up and bit the bullet. Taxes are one of these times. It may seem like a harmless idea at first to come up with a magical number for your income so you are eligible for certain tax credits like the Earned Income Tax Credit, but remember that you're legally responsible for what's on your return. Claiming a false income could result in hefty bills, interests and penalties down the road that could really ruin your vacation plans.

10. Abusive Tax Shelters

It's true what they say-there are two things you can't avoid in life: annoying relatives and taxes. If you think you're can somehow get out of paying taxes, think again. The IRS lives for people who believe they're above taxes, and hunts them down relentlessly. You should never use abusive tax structures or tax shelters that promise to get you out of your taxes. Not only are these all undoubtedly a scam, you will eventually get caught and punished for not paying your taxes. If you're having any doubts about an offer made to you, contact a tax attorney who can help you figure out what you should do.

11. Frivolous Tax Arguments

Keep saying this to yourself until it becomes engrained in your brain: death and taxes, death and taxes, death and taxes. No matter how much people will try to convince you, there is nothing you could say to the IRS that would convince them that you don't have to pay taxes this year. Frivolous tax arguments and the people who try to sell them to you are always a scam, and should be avoided at all costs. As a taxpayer, you do have the right to contest tax liabilities in court. You don't however, have the right to break the law. The fine for filing a frivolous tax return is $5,000. That's a lot of money that you could save by just paying your taxes without the fuss.

12. Offshore Tax Avoidance

If you have had any exposure to the news in the past couple of years, you can see why it's not the best idea in the world to hide your money offshore. Sure it may make you feel like you're a high-profile celebrity, but with the recent consequences enforced by the IRS to those who have been caught cheating their taxes with offshore money the cool factor may not be worth the risk. There are plenty of other ways to feel like James Bond when it comes to your money, correctly paying your taxes is one of them.

Please do not hesitate to contact Principal Attorney Stephen A Weisberg if you have questions about tax scams, tax return preparation or IRS liens, levies and tax debts. Call us at 1-866-716-7132 or email us at [email protected]

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