Taxpayers Who Buy Into Tax Scams Can Pay the Price

Author: Keith Huggett 

According to the IRS, tax scams tend to peak right around now, at the apex of tax season.  If a taxpayer gets caught up in an illegal tax scam, the taxpayer may end up facing significant penalties and interest and can even face criminal prosecution. As the cliche goes, if it sounds too good to be true, it usually is.  Please be aware, and be on the lookout for the following:

• Identity Theft - The IRS is doing it's best to combat identity theft. The IRS’s ID theft strategy focuses on prevention, detection and victim assistance. If you believe you  are at risk of identity theft due to lost or stolen personal information should immediately contact the IRS so the agency can take action to secure their tax account. If you have received a notice from the IRS, call the phone number on the notice. You may also call the IRS’s Identity Protection Specialized Unit at 800-908-4490800-908-4490 FREE.
• Phishing.  Phishing typically involves an unsolicited email or a fake website that seems legitimate but lures victims into providing personal and financial information. Once scammers obtain that information, they can commit identity theft or financial theft.
  
• Tax Scams Involving Social Security.  Beware of scammers who prey on people with low income, the elderly and church members around the country. Scammers use flyers and ads with bogus promises of refunds that don’t exist. The schemes target people who have little or no income and normally don’t have to file a tax return.
  
• Impersonating a Charitable Organization.  Following major disasters, it’s common for scam artists to impersonate charities to get money or personal information from well-intentioned people. 
  
• Frivolous Arguments.  Promoters of frivolous schemes advise taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. These are false arguments that the courts have consistently thrown out. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.
  
• Disguised Corporate Ownership.  Scammers improperly use third parties to form corporations that hide the true ownership of the business. They help dishonest individuals underreport income, claim fake deductions and avoid filing tax returns. They also facilitate money laundering and other financial crimes.
  
• Misuse of Trusts.  There are legitimate uses of trusts in tax and estate planning. But some questionable transactions promise to reduce the amount of income that is subject to tax, offer deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the promised tax benefits. They primarily help avoid taxes and hide assets from creditors, including the IRS.
  

There are other scams out there that can also get the taxpayer into trouble. If you are uncertain about something, you can always contact your tax preparer and ask. It is always better to ask a question and get a proper answer than to take a risk on a sketchy proposition.

As always, the professionals at The Tax Office, Inc. are here to answer any questions you might have, whether they are about taxes, scams, accounting, or tax representation. We are always here for you.