Embed Size (px)
Citation preview
5 Tax Scams to AvoidFive scams every taxpayer should be
aware of this summer..
Phishing
Phishing is a tactic used by con-artists to trick unsuspecting victims into revealing personal or financial information through electronic communication. Scams can take the form of e-mails, texts, tweets or phony websites, and they try to mislead taxpayers with messages about a pending tax issue with the IRS, compelling the taxpayer to reveal personal information. Regardless of how official this message may look and sound, the IRS never makes unsolicited e-mail or text contact with taxpayers about their tax issues.
Return Preparer Fraud
Shady tax return preparers can cause expensive tax problems for taxpayers who fall victim to their ploys. Common practices for dishonest tax preparers include skimming a portion of their clients' refunds, charging inflated fees for tax preparation or promising refunds that are too good to be true. To increase confidence in the tax system, the IRS is asks all paid return preparers to register with the IRS, pass competency tests and attend continuing education.
Hiding Income Offshore
In the past, taxpayers have tried to avoid U.S. taxes by hiding income in offshore banks and brokerage accounts. The IRS has increasingly cracked down on this practice through the Foreign Account Tax Compliance Act (FATCA) which requires both U.S. citizens and foreign financial institutions to report accounts held abroad by U.S. citizens. Taxpayers also evade taxes by using offshore debit and credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. As the IRS increases its worldwide reach, it has become more and more difficult to hide income or assets abroad.
Widespread Telephone Scams
IRS impersonator scams are widespread and have cost victims millions. In the IRS phone scam, victims receive calls from persons pretending to be IRS agents who demand immediate payment of a tax debt. They threaten arrest, deportation, loss of drivers license, etc. Remember, the IRS does not initiate contact with taxpayers over the phone, nor do they make exaggerated threats. If you receive a phone call from an IRS agent demanding immediate payment, hang up and report the number to the FTC: https://www.ftc.gov/
Frivolous Arguments
Promoters of frivolous tax schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on IRS.gov. These arguments are false and have been thrown out of court.
