The IRS “Dirty Dozen” Tax Scams for 2014, Part One

On Wednesday, the IRS released its annual “Dirty Dozen Tax Scams” list and warns taxpayers to be vigilant during tax season to avoid being victims. Here are the first six, and we’ll finish out the list in Monday’s post:

Identity Theft
The IRS has both a special department for identity theft victims – the IRS Identity Protection Specialized Unit – which can be reached at 800.908.4490, as well as a section on their website dedicated to identity theft issues, which can be accessed by clicking here.

Pervasive Telephone Scams
Callers pretend to be from the IRS (and can even spoof caller ID to make it appear valid), saying the victims owe money or are entitled to a huge refund. Some calls are threatening, warning of arrest or revocation of the victim’s driver’s license. Some even have a follow-up call purporting to be from the local police or motor vehicle department. The purpose of these calls is to steal money or identities from victims.

If you receive a phone call from someone claiming to be from the IRS, and you truly think it might be valid, call the IRS at 800.829.1040. If you don’t think the call is valid, report the incident to the Treasury Inspector General for Tax Administration at 800.366.4484. You should also contact the Federal Trade Commission at FTC.gov, adding “IRS Telephone Scam” to your comments.

Phishing
Phishing scams lure victims to provide personal identifiable information by clicking on links or attachments, allowing the criminal to commit identity or financial theft. The IRS does not initiate contact with taxpayers by email, text or social media in order to request personal or financial information. If you receive an unsolicited email supposedly from the IRS, report it by sending it to phishing@irs.gov.

False Promises of “Free Money” from Inflated Refunds
Not everyone who poses as a tax preparer is legitimate. Beware of choosing your tax preparer from a flyer, advertisement, or community bulletin board. If it sounds too good to be true, it usually is. Remember that you are legally responsible for what’s on your return. Be sure your refund gets deposited into YOUR account, not the preparer’s. Honest tax preparers generally ask for proof of income and eligibility for credits and deductions, sign returns as the preparer, enter their IRS Preparer Tax Identification Number (PTIN) and provide the taxpayer with a copy of the return.

Return Preparer Fraud
Like the scam mentioned above, beware of unscrupulous preparers. For tips about choosing a preparer, visit www.irs.gov/chooseataxpro. And to report abusive tax preparers, you can complete Form 14157, Complaint: Tax Return Preparer, which is also available under the “Forms and Publications” link at www.irs.gov.

Hiding Income Offshore
US taxpayers who maintain offshore accounts are responsible for complying with reporting requirements. Those who don’t comply risk significant penalties and fines as well as possible criminal prosecution. The IRS Offshore Voluntary Disclosure program provides a means for individuals to come forward and catch up back taxes, interest and penalties.

Stay tuned for the rest of the “Dirty Dozen” tomorrow!