Beware of these ‘Dirty Dozen’ tax scams

As tax season is heating up, so are the scams.

The Internal Revenue Service has rolled out its annual “Dirty Dozen” list of tax scams for the 2018 filing season. Many of the scams are perennial, showing up year after year, while others have a new twist on an old con.

One such example is the age-old phone scam. During the tax filing season in particular, scammers purporting to be IRS agents will call taxpayers and claim they owe taxes. The criminals will often threaten their victims with arrest, deportation and license revocation if they do not pay the bogus tax bill. In a new twist being seen in recent weeks, identity thieves file fraudulent tax returns with refunds going into the real taxpayer’s bank account – followed by a phone call trying to con the taxpayer to send the money to the scammer.

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year.

Some of the other scams that have made the list so far this year are:

  • Phishing scams – these scams affect individuals and businesses with criminals using fake emails or websites to steal personal identification information.
  • Tax-related identity theft – While instances of identity theft – where scammers steal Social Security or Individual Taxpayer Identification numbers to file fraudulent tax returns and claim a refund – have declined in recent years, scammers are getting more creative.
  • Tax return preparer fraud – Unscrupulous tax preparers can lure in victims with outsized promises of overly large refunds only to steal their personal information.
  • Fake charities scams – Particularly in times of natural disaster, hucksters will set up sham charities, hoping to cash in on their victims’ well-meaning desire to help others. These scams come into focus during tax season as people report their charitable contributions on their tax returns.
  • Inflated refund scams – Con artists dupe people – particularly those who may not have to file a tax return if they have low income, for example – into making claims for fictitious rebates, benefits or tax credits.
  • Falsely inflated deductions or expenses – Some people will overstate deductions, such as charitable contributions, pad business expenses, or include credits they are not entitled to receive, like the Earned Income Tax Credit or Child Tax Credit.
  • Improper business credits – Two common credits that are often fraudulently taken are the research credit and the fuel tax credit. While they are both legitimate, there are specific criteria to qualify for them.
  • Falsified income and fake 1099s – Scammers will try to file for an inflated tax refund by overstating or including income on a tax return that was never earned, either as wages or self-employment income.
  • Frivolous tax arguments – Some will scheme to avoid paying a tax bill by making unreasonable or outlandish legal claims.
  • Abusive tax shelters – Unscrupulous taxpayers try to establish complicated and illegitimate tax shelter schemes in hopes of sheltering assets from taxation.
  • Offshore tax cheating – Some tax schemers will try to hide money in international accounts to avoid paying taxes.

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