Tax Scam – Tax Fraud

Wherever there is the potential to make money there is the potential to be scammed and that is why tax scams are so prevalent today. In fact, the IRS releases what they call the “dirty dozen” each year, which are 12 common scams that consumers need to be aware of. Some of these scams are being pulled by the consumers themselves and in other instances scammers are actually taking advantage of the naivety of the tax payer.

Tax Fraud to Steer Clear Of

The most common scam comes in the form of an email. It tells the tax payer that after making the rounds that the IRS has found that they shorted the individual on their refund. The email looks legit with an IRS logo and it asks the individual to visit their website to validate their identity and arrange to receive the refund. The person is then provided a link to the “form” that they need to complete to receive the remainder of their refund. O the form the individual has to enter their name, address, date of birth, social security number, and their bank account number. Little do most people know, they are simply handing over their personal information to an identity thief. The thief can then take this information and clean out bank accounts, steal stock money and savings, open new credit card accounts, and simply destroy the person and their financial standing. This is in effect, a simple way to steal a person’s identity and it happens every tax season to an unknown number of people.

Another of the common tax scams involves the tax preparers, the professionals that you would go to, to have your taxes done for you. Many of these individuals actually add expenses or deductions or even unallowable credits to the taxpayers return. The preparer will then file the return electronically and when they receive the refund on behalf of the tax payer they will take out the money that is in addition to what the taxpayer was expecting, with the taxpayer none the wiser. The problem is that when the IRS figures out what happened the taxpayer will be the one responsible for paying back the funds as well as any fees and facing any legal charges because ultimately it is the taxpayer who is responsible for any mistakes on the return.

If you are going to use tax preparer for your return you need to have tax scams on the brain. You need to do your homework and make sure that the individual that you are dealing with is legit. You an do this by steering clear of the people who tell you that they can get you more money on your refund than anyone else, there has to be a way that they are able to do this and it probably isn’t legal. You should also steer clear of those that base their fee on a percentage of the money that you get on your refund, you want someone who charges a flat fee for his service as this will ensure that they don’t fudge the numbers on your return to get more money. Make sure that you view your return before it is filed and that you understand it, if you don’t, ask questions and ask that corrections be made.

Remember that even if your return is wrong because of tax scams that you are responsible. The IRS doesn’t care who prepares your taxes, they care whose name is attached to it. This is why you need to do your homework to avoid tax scams. Just remember the simple adage that if it sounds too good to be true, it probably is. Also, if you receive correspondence from the IRS and you aren’t sure it is legit, pick up the phone and call them to be sure. It’s better to be safe than sorry! This is by no means an all inclusive list of the tax scams that you need to avoid. Each tax season you should visit the IRS website where they keep a running list of tax scams. It has been noted that the IRS is cracking down on scams, so if you are the one scamming or fudging numbers, you had better watch out because the IRS may be onto you!

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