Putting it Together Blog

2016 Tax Scams! Be Aware!

Posted by Keith Huggett on Tue, Feb 2, 2016 @ 10:02 AM

Every tax season, taxpayers have to be on the lookout for con artists looking to run tax scams. With a variety of tactics at their disposal, these criminals find ways to get your personal information and look to turn it into cash. Let's take a look at five of the most common tax scams that the IRS has highlighted in recent warnings to taxpayers.

1. Identity theft
The most insidious tax scam involves thieves stealing your personal information and using it to file false tax returns on your behalf. Often, the scam goes unnoticed until you later file your legitimate tax return and the IRS informs you that a return has already been filed. The IRS has issued about 1.5 million personal identification numbers aimed at helping victims of identity theft, and it has also started a pilot program in some states that allows people to get PINs even if they haven't been victimized. For most taxpayers, though, the best defense is to protect your personal information as well as you can.

2. IRS impersonation
Some scams involve threatening emails or phone calls from people purporting to work for the IRS, saying that you could be arrested, have your license revoked, or even get deported if you don't agree to comply with their demands. The IRS reminds taxpayers that it will never call to demand immediate payment, ask for credit or debit card numbers over the phone, or threaten to bring in law enforcement officials.

3. Caller ID spoofing
One tool that many criminals have in their arsenal of tricks is the ability to have your caller ID system display what appears to be a legitimate IRS toll-free customer service number. These scams often involve robo-calling systems and can include a combination of tactics, including related emails and phone calls purporting to be from other organizations like police or DMV. The IRS advises that if you're ever uncertain, hang up and then call the IRS back at 1-800-829-1040 FREE. That way, a real IRS representative can confirm whether there's a legitimate issue.

4. Bogus charitable organizations
The end of the year brings a big uptick in charities asking for donations, and criminals have discovered that many people are willing to part with their money for what they think is a good cause. Earlier this year, four charities claiming to raise money for cancer victims were accused of fraud, with the FTC alleging that donors were taken for $187 million over a five-year period. Often, such charities have convincing names, but it's important to go further to check that these organizations are legitimately registered with the IRS as tax-exempt non-profit organizations. This IRS website will let you enter the name of a charity to verify whether it's legitimate and is still eligible to receive tax-deductible contributions.

5. Tax preparer phishing
Not all scammers target individual taxpayers. In one scam, criminals send out emails to accountants and other tax preparation professionals, telling them that they need to update their information in order to keep using the IRS e-services portal. In the process, the con artists hope that unsuspecting accounts will provide their usernames, passwords, and electronic filing identification numbers. That information in turn can help the criminals impersonate tax preparers and seek to get personal information from clients and other individual taxpayers.

Doing your taxes is hard enough without having to worry about tax scams. With plenty of crooks out there, you can't afford to let up your guard. Knowing the tactics they use can help you avoid getting scammed. Filing your taxes early, with a reputable preparer can also help avoid these scams.

What is Tax Fraud Exactly?

Posted by Keith Huggett on Thu, Mar 7, 2013 @ 09:03 AM

Accidental Fraud or Committing a Crime?

Tax fraud. During tax season it's in the headlines right next to the advertisements for tax preparers. So what constitutes tax fraud? Why are so many people committing it? Or maybe the question is, do people know they are commiting fraud or is it nonintentional?

While most Americans legitimately try to file their taxes correctly and on time, there is a small percentage that intentionally avoid it or try to cheat in some way of their legal tax obligations. If you intentionally violate your legal duty to voluntarily file your income tax returns and/or pay the correct amount of income, employment, and excise tax due, you are committing a "tax fraud." Some of the ways you can break the tax laws and commit tax fraud include:

Claiming false deductions

Concealing or transferring assets or income

Knowingly changing your income

Over reporting the amount of deductions

Possessing two sets of books

Recording personal expenses as business expenses

Using false amounts in books and records

In 2012 there were 1863 general tax fraud investigations initiated by the IRS Criminal Investigation Division. 1384 cases were recommended for prosecution. There were 1306 indictments. 897 cases resulted in sentences being passed. The average sentence involved 34 months spent in a federal prison, halfway house, home detention, or combination of all three.

From the 1920's to the present day there has been a long list of famous people convicted of committing tax fraud or tax evasion. This is most definitely not a "Who's Who" list you want to become a part of. Famous tax evaders:

Al Capone - Wanted for a host of crimes but was convicted of tax fraud. Sentenced to 11 years in federal prison and fined $80,000.

Pete Rose - Spent 6 months in prison for filing 2 false income tax returns. He was required to pay $366,000 in back taxes.

Leona Helmsly - She was convicted of tax fraud and spent 4 years in prison.

Walter Anderson - Has the honor of having the largest tax evasion case in the history of the United States. in 2006 he pleaded guilty to hiding approximately $365 million word of income through the use of aliases, offshore accounts and shell companies. He was sentenced to 9 years in prison and restitution of $200 million.

Former Vice President Spiro Agnew - In 1973 he pleaded no contest to tax evasion and money laundering. He resigned, received 3 years of probation and paid a $10,000 fine.

There are many, many more people on the list of famous people who have paid fines or back taxes to the IRS without serving time in prison. The consequences are not worth the effort it takes not to file your tax returns.

While the IRS knows the difference between a genuine mistake and intentional tax fraud, it pays to get your carefully prepared tax returns submitted on time. Or, if you can't get your return filed by April 15th, be sure to have your tax preparer file that extension.

Filing your taxes can get complicated. Get help from experienced, professional tax preparers. When you are choosing your tax preparer, make certain it is a reputable company. You want to make certain you have the best for the job. April 15th is right around the corner.