The Dirty Dozen — a 1967 war movie starring Lee Marvin, Charles Bronson, and Jim Brown, or a list of the top twelve tax scams as identified by the Internal Revenue Service? How about both?
Each year, the IRS releases a list of the “Dirty Dozen” tax scams to watch out for during tax season. This year’s list, shown below, includes classic scams as well as some new twists.
1. Identity Theft – Tax time brings extra activity among thieves looking for Social Security numbers and other personal information that allows them to falsely claim refunds (not to mention running up bills and draining bank accounts). Be very protective of your personal information. Let MoneyTips protect your credit and your identity with a free trial.
2. Phishing – The IRS does not e-mail you or direct you to websites regarding any bill without prior contact. Do not be fooled by e-mails encouraging you to click on links to a site in reference to your tax bill; the website may be a fake, designed to gain your personal information.
3. Phone Scams – Con artists sometimes impersonate IRS agents and threaten arrests, deportation, and other unpleasant outcomes unless a bill is paid immediately over the phone. No matter what horrible things you think about our tax system, the IRS does not do business this way. Never give out your personal information over the phone unless you initiated the call and are sure you are dealing with a real IRS agent.
4. Preparation Fraud – Some tax preparers bend the rules in order to get you the highest refund possible. Unfortunately, once you sign and file the return, you are responsible for any errors. If you choose to have others do your taxes, be sure to use a reputable tax preparer. “The number one thing is finding someone who is honest and has integrity,” advises Betterment Head of Tax Eric Bronnenkant. “It’s someone whom you’re trusting with all of your personal financial information, so that provision shouldn’t be taken lightly.”
5. Offshore Tax Avoidance – The IRS is cracking down on hiding money offshore to avoid tax payments. If you find yourself in this position, use the IRS’s Streamlined Filing Compliance Procedures (SFCP), the delinquent Report of Foreign Bank and Financial Accounts (FBAR) submission procedures, or the delinquent international information return submission procedures to make things right — or run the risk of severe penalties. The Offshore Voluntary Disclosure Program (OVDP), which closed on September 28, 2018, was the primary channel to make such disclosures in previous years. Since the program’s inception in 2009, the IRS received more than 56,400 disclosures and collected over $11.1 billion through the OVDP.
6. Inflated Refunds – Anyone who promises you a big refund without looking at your records first should be avoided. If it sounds too good to be true, guess what? It is.
Click here to read more.