The Internal Revenue Service released its Top Tax Scams for the 2017 tax season. While most tax fraud, particularly that involving identity theft, happens early in the tax season, scammers and con artists are on duty the entire year preparing. Therefore, information stolen this year could be used against you next year, so stay prepared against tax malfeasance.Phone scams — con artists impersonate IRS agents.
IRS agents will not threaten arrest, deportation or seek immediate payment through a single payment method, such as a credit card.
Identity Theft — While the IRS successfully reduced the numbers of fraudulent claims using stolen Social Security numbers, it’s still a popular method with crooks.
Phishing — These usually take the form of fake emails directing the victim to fake websites that prompt the victim to enter personal information. The IRS does not initiate contact using email. Don’t click on any embedded links.
Fake Return Preparers — the seasonal nature of tax preparation brings con artists out of the woodwork during tax season. Beware of shady looking temporary businesses.
Fraudulent Charities — The promise of a tax deduction makes charities attractive to those looking for ways to maximize refunds. Beware of charitable organizations whose names aren’t exactly what you’d expect. Their tax receipts may be worthless.
Improper use of business tax credits — this is one that the average taxpayer may fall into accidentally. Be sure you’re correctly claiming deductions. The few dollars you save may not be worth the added hassle if you’re caught.
Padding personal claims — the same is true for personal deductions. Any amount not supported with paperwork could land you in hot water.
Tax Shelter abuse — while everyone has the right to take all legitimate deductions, trying to pay less by stretching tax shelter rules is forbidden. Beware of anyone selling a tax shelter scheme.
Offshore Banks — tucking money away in another country to avoid paying tax is illegal. Taxpayers who have done this in past can come forward and volunteer this information before getting caught.
Unreasonable tax interpretations — promoters of frivolous tax schemes tend to use arguments that have already been tested in court and rejected. While taxpayers have the right to question tax liabilities in court, filing a return deemed frivolous could cost $5,000 in fines.