The 14 Most Common Tax Scams

The IRS has published an annual “dirty dozen” list of scams since 2015. There’s been little change between the 2015 list and today. In fact, the 2016 and 2017 lists are exactly the same.

But there is one nuance between 2015 and 2017: The adage “the IRS will never call you” is no longer technically true. The IRS is now contracting private debt collectors to recover past-due taxes. With that said, it is very unlikely that this will be the first communication made to a taxpayer about a past-due debt.

And Here They Are

The most common tax scams since 2015 are:

  1. Phone Scams: Phone calls from IRS impersonators remain a common scam. Criminals threaten taxpayers with arrest, deportation, and license revocation. The most frequent indication that a call was a scam used to be this: the IRS never called anyone to inform them of a tax issue without first making contact through the mail. This is no longer true. The agency offers this advice to anyone who receives a call from an IRS collector:
  • It will be a live agent. IRS debt collectors are prohibited from using robo-calls.
  • The agent will never demand payment with an electronic check, wire transfers, or credit/debit card.
  • The agent will never threaten arrest or to send anyone to a home or place of employment.
  1. Phishing: The IRS does not initiate contact through email.
  2. Identity Theft: An old scam but more pervasive than ever with the expansion of online filing. Criminals’ prime quarry: social security numbers to file fraudulent returns.
  3. Return Preparer Fraud: Before trusting anyone claiming to be a tax professional, ask for their IRS Preparer Tax Identification Number (PTIN). Confirm its validity at https://irs.treasury.gov/rpo/rpo.jsf.
  4. Fake Charities: Another perpetual ruse that often involves alleged charities with names similar to nationally known organizations.
  5. Inflated Refund Claims: Don’t trust anyone who asks for a signed blank return.
  6. Excessive Claims for ‘Research Credits’: This doesn’t exist.
  7. Falsely Padding Deductions on Returns: If it isn’t the truth, it’s a scam.
  8. Falsifying Income to Claim Credits: Con artists often offer ways to invent income to qualify for tax credits.
  9. Tax Shelters: If a complex tax-avoidance scheme sounds too good to be true, seek another opinion.
  10. Obscure Tax Arguments: Fraudsters commonly encourage taxpayers to make outlandish claims based on court rulings and obscure regulations. Do preliminary research—court rulings and regulations are public records.
  11. Offshore Tax Avoidance: These schemes are orchestrated by con artists claiming they represent sophisticated financial organizations that can “hide” money offshore.
  12. Hiding Income with Fake Documents: Filing false Form 1099s or other fake documents is a frequent scam. Remember: the taxpayer—not the con artist—is ultimately legally responsible.
  13. Excessive Claims for Fuel Tax Credits: This credit is generally limited to off-highway business use, such as farming. It is not available to commuters and others, although fraudsters often convince many to claim it.

Many scams manipulate taxpayers’ desire to take advantage of loopholes and obscure deductions in the tax code without actually becoming familiar with the tax code. The bottom line is there are so secrets in the tax code: Look it up.

Read up for more information on scams: https://www.e-file.com/faq/scam-victim.php