Top 6 Tax Scams List Put Out by the IRS
Are your taxes done? If you haven’t and you are feeling the pressure to get them done. There are unscruplous tax preparers out there who will try to make you feel very good about a great big refund. However, the truth is, they are scamming you. This list will show you how they deceive you with unethical tax preparation practices. Instead of getting caught in this ordeal, we suggest you file an extension.
The IRS recently put this list of the top six tax scams on the website to help you avoid being caught victim to illegal tax practices. If you fall victim to one or more of these tax scams, you could end up with tax penalties, interest and worse, no refund!
Offshore Tax Cheating
This scam is about hiding money or assets, thereby avoiding tax payments. The results in underreported income. This deceptive practcies is done through offshore banks, brokerage accounts and nominee entities. There are also employee-leasing schemes, foreign trusts, private annuities or insurance plans set up for the same goals.
Another techinque that in use is third party reporting. So, as the IRS is gathering information, they are carefully looking at year or year reporting and checking for consistent compliance.
The IRS uses information to investigate accounts that avoid reporting and declaring the money. Learn more about Offshire Tax Cheating here: See IR-2017-35.
Frivolous Tax Arguments
The IRS warns taxpayers not to avoid paying taxes, and don’t think about using these frivolous arguments. The IRS gives an outline of these types of arguments in it’s article, “The Truth about Frivolous Tax Arguments”.
Often fradulent tax preparers will talk you into using these frivilous arguments to make your case. Don’t do it! Trust me when I tell you that the IRS has heard it all.
Read more here: See IR-2017-33.
Abusive Tax Shelters
This has made the Dirty Dozen list for three years in a row. Abusive tax shelters are fake tax shelters made up so that you avoid tax payments. According to IRS Commissioner John Koskinen. “These scams can end up costing taxpayers more in penalties, back taxes and interest than they saved in the first place.”
In abusive “micro-captive” structures, accountants, wealth planners or persuade owners of closely held entities to join in schemes that lack many of the attributes of genuine insurance. The IRS gives the example of coverages that may insure implausible risks. These coverages fail to match genuine business needs or duplicate the taxpayer’s commercial coverages. The premium amounts do not have the documentation by underwriting or actuarial analysis to support the claim. While that claim may seek a specific deduction amount or may be much higher than premiums for comparable commercial coverage. You can read about Abusive Tax Shelters here: IR-2017-31.
Don’t make up income because it is just as deceptive as making up claims on your tax return. This is usually done with a fake 1099-MISC form. See IR-2017-29.
No, no, no! To say it simply, when you inflate deductions or expenses on your tax return, you are reducing income, which is stealing from the IRS.
To avoid this practice, read here: IR-2017-28.
Excessive Business Credits Claims
Be careful not to take credits on your business that do not belong to your business. One such mistake is the Fuel Tax Credit scam. There are two ways this scam is put into practice. The first is when an individual or business makes an false claim on their otherwise valid tax return. Or an identity thief claims the credit in a plot as part of a broader fraudulent scheme. Read more about this here: IR-2017-27.
The remaining six scams are:
- Inflating Refund Claims – See IR-2017-26.
- Fake Charities – See IR-2017-25.
- Identity Theft
- Phone scams
- Phishing Scams
- Return Preparer Fraud – IR-2017-23.
Scams are Expensive
All of these scams affect you, the taxpayer, or your business, in a serious and expensive way. Ultimately, you are responsible for what is claimed on your return because in the end, you sign it. So before you do, always double check the information for accuracy.
Don’t Rush Filing a Tax Return, File an Extension
We can help you file your tax information accurately and in a timely manner. Currently, we are offering new clients an Extension Discount of up to 15% Off!*
Call Alex Franch, BS EA a call at 781.849.7200 for details. Alex Franch is an enrolled agent with the IRS. Call right away so that we can schedule an appointment and/or file an extension, if necessary. You are welcome to meet with someone from our tax team, or you may also book your appointment online.
If this office is holding up the completion of your returns because of missing information, please forward that information to us as quickly as possible so that we meet the April 18 deadline. Please keep in mind that the last week of tax season is very hectic. Unfortnately, waiting until the last minute, means your tax returns will miss the tax deadline. Do you expect that the tax information will not be available in time for the April 18 deadline? Let our office know right away. At the very least, we can prepare and file an extension request, and the 2017 Estimated Tax Vouchers if neccessary.
Oh, and we have an incentive for you. Drop off or mail your taxes to one of our three locations in locations in Quincy, Weymouth and Dedham an you will save $35 on your tax preparation click here for details and other incentives. Please note some exclusions may apply.
Tax Fraud Sources and Resources
- Tax Filing Due Date 2017 is Fast Approaching
- Do You Owe Taxes to the IRS? Can You Afford the Tax Penalty?
- IRS Takes Action on Tax Credits
- Identity Crooks Are at It Again!
- Pervasive Telephone Scams: Did you get a call from the IRS?
- Taxpayer Identity Theft: IRS v Massachusetts
- Phishing Scams and Tax Scams Part 1 of 4
- Scams: Identify, Avoid Them! Part 2
- IRS Email Scam: Stop, Think, Delete – Part 3
- What Is In Your Wallet? Part 4
*This offer cannot be combined with the New Client Discount or the Drop-Off discount. Other exclusions may apply.