Top 12 Tax Scams of 2013

Contributor: Brittney Trigg, Florida Coastal School of Law JD and business law certificate candidate 2014, law clerk for Law Offices of Xavier Saunders, P.A.

Every year the IRS (Internal Revenue Service) issues a list of tax scams called the “Dirty Dozen” to remind taxpayers to protect themselves against a wide range of schemes during tax season. This year the IRS has just listed the following “Dirty Dozen” tax scams:
1. Identity Theft

Identity is number one on the Dirty Dozen list. Identity theft occurs when someone uses your personal information, such as your name and Social Security number (SSN), without your permission, to commit fraud or other crimes. The IRS actively protects victims of identity theft by conducting identity theft enforcement sweeps. Taxpayers who believe they are at risk of identity theft should contact the IRS immediately so the agency can take action to secure their tax account. IRS Identity Protection Specialized Unit 800-908-4490

2. Phishing

Phishing is a scam typically carried out with the help of unsolicited emails or fake websites that pose as legitimate sites to bait possible victims and prompt them to provide personal and financial information. This allows criminals to use the information to commit financial theft.

3. Return Preparer Fraud

60 percent of taxpayers use tax professionals to prepare their tax returns.  Some tax preparers prey on taxpayers to commit refund fraud. For example, a fraudulent tax preparer might direct deposit a victim’s refund check into the preparer’s own bank account.

4. Hiding Income Offshore

Numerous individuals evade U.S. taxes by hiding income in offshore banks and other accounts.

5. “Free Money” from the IRS and Tax Scams

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in communities around the nation. The tax preparer will falsely prepare returns for people with little or no income, and promise them invalid tax credits.

6. Impersonation of Charitable Organizations

This is another scam that occurs after a major natural disaster. Scam artists impersonate charities to get money or private information.

7. False/Inflated Income and Expenses

This occurs when people lie about their income and expenses on their taxes.

8. False Form 1099 Refund Claims

Do not file false forms and watch out for Form 1099-OID

9. Frivolous Arguments

Some promoters encourage taxpayers to make outlandish and unreasonable claims to avoid paying the taxes that they owe.

10. Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes.

11. Disguised Corporate Ownership

Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business. These entities can be used to underreport income, claim fake deductions, and commit several other financial crimes.

12. Misuse of Trusts

Trusts have been misused by transferring assets into trust funds to lower income tax liability.

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