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Phishing tops IRS' 2018 list of Dirty Dozen tax scams

Those fake emails looking to steal your tax and personal data top the annual IRS scam list, but 11 other crooked tricks also made it, including fake IRS agents, sham charities and frivolous tax arguments (which are the only time anyone associates taxes with frivolity!). Highlights of each of the Dirty Dozen scams will be added as the IRS releases them, one a day over 12 business days, so keep checking back.

Phishing-fish hook on computer keyboard
Phishing once again makes the Internal Revenue Service's annual list of Dirty Dozen Tax Scams.

When it comes to tax scams, the late and loquacious MLB Hall-of-Famer Yogi Berra nailed it: "It's like déjà vu all over again."

The Internal Revenue Service's 2018 list of the 12 worst tax scams reads a lot like 2017's collection. And like the scams tagged in 2016 and 2015 and…. You get the idea.

The sad fact is that tax crooks have found a batch of schemes that seems to work. So they pull them out year after year, especially during tax-filing season.

The 2018 Dirty Dozen tax scams are:

  1. Phishing 
  2. Phone Scams
  3. Identity Theft
  4. Return Preparer Fraud
  5. Fake Charities (Part 2 post)
  6. Inflated Refund Claims (Part 2 post)
  7. Excessive Claims for Business Credits (Part 2 post)
  8. Falsely Padding Deductions on Returns (Part 2 post)
  9. Falsifying Income to Claim Credits (Part 3 post)
  10. Abusive Tax Shelters (Part 3 post)
  11. Frivolous Tax Arguments (Part 3 post)
  12. Offshore Tax Avoidance (Part 3 post)

Old schemes, new twists: While many of these scams have appeared on the IRS' annual list in years past, the agency notes that scammers often tweak the schemes from year to year. Frequently, the crooks use new twists and variations and employ more desperate and elaborate mechanisms to swindle people out of their money.

To help you be on guard for new takes on old scams, the IRS is once again separately releasing warnings on the schemes that taxpayers may encounter this year.

Starting today and for the next 11 business days, it will provide details on each of the scams, ending with a wrap-up of the latest Dirty Dozen on the 13th day.

The specific focus on these ploys to steal taxpayer personal information, scam individuals out of money or talk them into engaging in questionable behavior with their taxes will, believes the IRS, help prevent folks from becoming victims.

The ol' blog agrees with this approach. So as the IRS releases details of the 2018 scams on its worst list, I'll add the announcements' links — both in the numbered list above and the highlighted scam titles below — and a brief synopsis in this post.

So let's get started with the scam leading this year's Dirty Dozen list, phishing attempts.

1. New Phishing Schemes
The IRS continues to see a steady onslaught of new and evolving phishing schemes as scam artists work to victimize taxpayers during filing season. One recent twist saw crooks file fake returns using taxpayer data (many times stolen from tax preparer databases), then deposit the fraudulent refund amount directly into the real taxpayers' bank accounts. Really! You can read more on this scam in my earlier post on this latest tax identity theft twist.

The IRS also has seen email phishing schemes pop up in recent weeks targeting tax professionals, payroll professionals, human resources personnel and schools, as well as individual taxpayers. Here, criminals pose as a person or organization the taxpayer trusts or recognizes, such as a tax colleague, financial institution, tax software provider or government agency. In all cases, the crooks are seeking your personal and tax information.

2. Telephone Scams
The Treasury Inspector General for Tax Administration (TIGTA) reports they have become aware of over 12,716 victims who have collectively paid over $63 million as a result of phone scams since October 2013. And the criminals are still calling. That's why phone tax scams remain on the annual Dirty Dozen list.

During filing season, the IRS usually sees a surge in scam phone calls. The pervasive IRS agent impersonation scam is sill around. Here, crooked callers threaten such things as arrest, deportation and license revocation if the victim doesn't pay a bogus tax bill.

In a new twist being seen in recent weeks, and mentioned in the phishing scam item, identity thieves file fraudulent tax returns with refunds going into the real taxpayer’s bank account, then call the account owner to con the taxpayer into sending the money to the scammer.

3. Identity Theft 
The good news is that reports of tax-related identity theft have declined markedly in recent years. The bad news is that there are still enough tax ID thieves out there to earn these scams the third spot on the IRS' 2018 Dirty Dozen list.

Tax-related identity theft occurs when a stolen Social Security number or Individual Taxpayer Identification Number (ITIN) is used to file a fraudulent tax return claiming a refund. The IRS says that the number of tax identity theft victims has fallen nearly 65 percent between 2015 and 2017. But those ID thieves still working this angle have become more creative, stealing not only individual taxpayer identities, but also business IDs, too.

4. Return Preparer Fraud
More than half of U.S. taxpayers relying on someone else to prepare their tax return, usually a tax professional (although some folks still turn to family for help). Most of the tax preparers are honest.

But most isn't all. That's why this year the IRS has once again included tax return preparer fraud on the annual Dirty Dozen watch list of common tax scams.

Unscrupulous tax preparers look to make a fast buck from honest people seeking tax assistance. These often are pop-up tax preparation offices that appear for a few days or weeks then disappear. Also avoid a tax preparer whose fee is based on a percentage of your refund.

And never fall for a tax preparer who immediately promises a refund. While you might indeed be due cash back from Uncle Sam, no one can guarantee that without first looking at your personal tax situation.

So be sure to pick the tax preparer who's right for you. And definitely be sure to check him or her out before handing over your tax life details.

Scams 2 through 12 details on the way: Careful readers of the ol' blog probably noticed in the Dirty Dozen numerical list above that in addition to the scam names' linking to IRS announcements on each of the particular scams, there also are some parenthetical references to Parts 2 and 3. 

Yep, instead of making this a ginormously long single post, I'm breaking it into three, with four scams for each. Scam 5, fake charities, will lead off Part 2. I'll put in a link to that post (DONE!), as well as to Part 3 (DONE!), when each is live (they are!) here on the ol' blog.

In the meantime, stay aware and be wary!

"We urge taxpayers to watch out for these tricky and dangerous schemes," said Acting IRS Commissioner David Kautter in announcing this year's 2018 tax scam list. "Phishing and other scams on the 'Dirty Dozen' list can trap unsuspecting taxpayers. Being cautious and taking basic security steps can help protect people and their sensitive tax and financial data."

For more on tax security measures, check out my blog post "items of interest" links below, as well as going to the ol' blog's archives and clicking on "scams" and/or "identity theft."

You also can review the identity theft and tax fraud prevention tips prepared by the Security Summit, a collaborative effort between the IRS, states and the private-sector tax community.

You also might find these items of interest:

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