Unfortunately for taxpayers and the Internal Revenue Service, there's nothing new under the sun when it comes to tax scams.
Fortunately for taxpayers and the IRS, the tax agency and its Security Summit partners are still on top of the most common scams that continue to pop up in some form year-round.
These 12 schemes, which have been dubbed the Dirty Dozen tax scams, get added attention, of course, during the main tax filing season.
During these hectic days from Jan. 1 — yes, some folks are ready to file that soon — through April 15, millions of us are trying to get our 1040s to Uncle Sam so we can, in many cases, collect our refunds despite some issues connected to the new tax laws.
Tax criminals try to short cut our legal filing efforts, using a variety of scams to steal personal info and tax identities in order to file for fraudulent refunds.
Repeat offenders: Crooks are creative, but only to a point when it comes to tax scams.
They often fine tune or tweak a con that's worked in the past. But they rarely come up with totally new tricks to try to steal our identities and tax money.
That's why the 2019 version of the Dirty Dozen tax scams contains schemes we've seen before.
As in past years, the schemes run the gamut from simple refund inflation scams to complex tax shelter deals.
Obviously, though, they keep working.
And there's a common theme throughout all the criminal efforts. Scams put taxpayers at risk.
So the IRS, and by extension the ol' blog and my media colleagues, are putting the word out once again about tax trickery to be on guard against this year.
Here goes, with recaps of the 12 scams and links to the IRS announcements that have more details on each.
1. Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2019-26)
2. Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2019-28)
3. Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else's Social Security number. (IR-2019-30).
4. Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2019-32)
5. Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high. (IR-2019-33)
6. Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. (IR-2019-35)
7. Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit. (IR-2019-36)
8. Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2019-39)
9. Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses. (IR-2019-42)
10. Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (IR-2019-43)
11. Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (IR-2019-45)
12. Abusive Tax Shelters: Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2019-47)
While the scams are repeats, they still should be taken seriously.
"Identity theft is a pervasive crime and stopping it remains a top priority of the IRS," said IRS Commissioner Chuck. "The IRS, with the help of our Security Summit partners, continues to make progress in this area, but we need to continue our significant efforts to protect taxpayers and assist those who have been a victim of identity theft."
The 12 criminal tax enterprises also earn this week's By the Numbers honor.
Dealing with a stolen identity: If you do fall for one of these tax scams, don't beat yourself up. Things happen, especially when crooks use taxes as hook. They know we are vulnerable at tax time, worrying whether we're missing something or making a costly mistake.
Do, however, take steps to mitigate the damage done by the scam.
If your e-filed return is rejected because someone has already filed using your Social Security number, submit IRS Form 14039, Identity Theft Affidavit. You'll need to use the form's fillable version at IRS.gov, print it, then attach it to your paper return and mail the material to the IRS.
Sometimes the IRS contacts possible tax identity theft victims before they file. This IRS outreach will be via a written notice. When you get it, respond immediately by calling the number provided in the notice.
And if you previously contacted the IRS regarding a tax fraud situation and are still waiting for a resolution, contact the agency's specialized identity theft assistance office toll-free at (800) 908-4490.
The IRS also has a special identity theft Web page with links to other information, both within the agency and outside resources, about coping with identity theft.
- File a complaint with the FTC at identitytheft.gov.
- Contact one of the three major credit bureaus to place a fraud alert on your credit records:
- Equifax, www.Equifax.com, 800-525-6285
- Experian, www.Experian.com, 888-397-3742
- TransUnion, www.TransUnion.com, 800-680-7289
- Contact your financial institutions and close any financial or credit accounts opened without your permission or tampered with by identity thieves.
The other solid piece of advice is to be skeptical. If you get an unsolicited call, whether it's about your taxes or other personal or financial situations, don't provide any information.
If you've sure it's a scam, simply hang up.
If you think you might have a tax or other financial matter that needs attention, you initiate the calls to the proper offices.
By being alert, you can protect yourself and help the IRS and its Security Summit partners continue to cut into these criminals.
You also might find these items of interest:
- Free credit freezes help with ID theft, but tax fraud prevention requires more
- Tax scam telephone calls seem fewer so far, but are likely to increase as April 15 nears
- Identity and tax thieves don't discriminate by age, targeting both youngsters and the elderly