Don't Mess With Taxes

It's tax-filing season, so you know what that means. It's also peak tax scam season.

In addition to collecting Americans' tax returns (and money) this time of year, the Internal Revenue Service also keeps an eye out for tax scams.

While con artists sometimes do get creative, most tax crooks tend to stick to tried-and-true scams. That's the case with IRS' annual list of tax skulduggery. All 12 scams cited this year made the agency's 2012 top 12 scam list.

The only change is that more fake charitable organizations have popped up, many in the wake of Hurricane Sandy.

After that super storm came ashore last October in New Jersey and New York, con artists took advantage of folks' goodwill to cheat them out of what they thought were much-needed, and tax deductible, charitable gifts.

Those despicable acts moved tax-related charity scams from 10th on the 2012 list to sixth on the 2013 Dirty Dozen tax scams.

Here, counting down to number one, are the five that this year finished just in front of the charity scams.

5. Social Security, IRS "free money"
Over the years, the IRS has seen a number of tax scams involving Social Security.

Scammers have been known to lure unsuspecting taxpayers with promises of non-existent Social Security refunds or rebates. In situations where a taxpayer may really be due a credit or refund, scammers have used inflated amounts on taxpayer returns to obtain a larger refund, which the con artist then takes.

Social Security con artists often focus on churches and community centers, where they can spread their scheme more easily through word of mouth.

Similarly, crooks target others who usually make little money and don't have a filing requirement by promising they can get them free money from the IRS.

4. Offshore accounts
In recent years, the IRS has cracked down on individuals who try to evade taxes by hiding income in foreign accounts. These so-called offshore accounts can be in banks, brokerage accounts or nominee entities that utilized debit cards, credit cards or wire transfers to access the funds.

Others tax schemes have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

While you may have legitimate reasons for maintaining financial accounts abroad, you also must report those accounts to the IRS. If you fail to meet offshore account reporting and disclosure requirements, you could face significant penalties and fines, as well as possible criminal prosecution.

3. Return preparer fraud
According to the IRS, around 60 percent of taxpayers use tax professionals to prepare and file their tax returns.

Most return preparers provide honest tax service, but as in any other business, there are also some who prey on clients. Questionable return preparers have been known to skim off clients' refunds and charge inflated fees for their services.

Choose carefully when hiring a tax preparer. Avoid preparers who guarantee refunds or promise larger-than-normal tax refunds, charge a percentage of your refund amount as the preparation fee or encourage you to enter false information on your return.

2. Phishing
One way for ID thieves to get your personal data is through phishing scams.

The con artists use unsolicited email messages or a fake websites designed to look like legitimate ones to lure potential victims into providing valuable personal and financial information. Once a crook has the information, he can commit identity theft or financial theft.

Remember that the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

If you receive an unsolicited message that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System, report it by sending it to [email protected].

1. Identity theft
The biggest problem, once again, for taxpayers and the IRS is identity theft. And it's getting worse.

The IRS says it is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer's identity and personal information to file a false tax return and claim a fraudulent refund.

Identity thieves obtain personal information by many different means, including stealing a wallet or purse or accessing information provided to an unsecured Internet site. They look for personal information in trash. They also pose as someone who needs information through a phone call or e-mail.

Victimized taxpayers often don't discover the ID theft until they file their own returns. That's when the legitimate filers get an IRS notice that more than one return was filed in his or her name and any refund was sent to someone else.

If you discover or even suspect your personal information has been stolen and used to file a fraudulent tax return, contact the IRS Identity Protection Specialized Unit (IPSU) toll-free at 1-800-908-4490.

Rest of 2013's scams: You can check out the rest of the 2013 Dirty Dozen tax scams at your leisure.

And remember, in all of these and other scam situations, if a tax refund promise sounds too good to be true, it probably is.

You also might find these items of interest:

• Identity theft, much of it tax-related, once again tops
  Federal Trade Commission's annual consumer complaint list
• Tax crooks cook up a food tax scam
• Beware tax scam illegally claiming the American Opportunity tax credit