The Internal Revenue Service and its Security Summit partners today wrapped up the eighth annual National Tax Security Awareness Week with a warning for everyone, individual taxpayers and tax pros, to stay alert to emerging tax scams.
It's a message the group issues regularly throughout the year because con artists work year-round to steal our money and, in many cases, our identities.
Once they get that personal data, they can file fake tax returns to try to collect fraudulent refunds.
By now, most of us are well aware of the warning signs of scams that show up as phishing, smishing, emails, U.S. Postal Service mail, social media messages, and, of course, phone calls.
So in today's Tax Felon Friday post, here's a look at how to report scams and tax fraud, whether you've just encountered a scheme or have fallen victim.
Information key to stopping crooks: Generally, you need to let the Internal Revenue Service know, as well as the Treasury Inspector General for Tax Administration (TIGTA).
The Federal Bureau of Investigation's Internet Crime Complaint Center also is interested. So is the Federal Trade Commission (FTC), which tracks fraud attempts, including those related to taxes. All these federal offices work to stop criminal attempts to scam taxpayers.
The Federal Communications Commission's (FCC's) Smartphone Security Checker is a useful tool against mobile security threats.
And don't forget about state efforts to fight tax fraud and identity theft. The Federation of Tax Administrations has a special Identity Theft Resources web page. If you are an individual, business, or tax professional who has been the victim of a data breach or another form of identity theft, the FTA page offers direction on how to report the incident to the appropriate state tax agencies.
All these agencies' combined scam-busting jobs are made easier when they get as much information as possible from members of the public who've been approached by con artists.
Here are some tips on reporting criminal tax schemes based on the type of attempted con.
Phishing: These cons usually arrive as unsolicited email. In many cases, they direct recipients to websites that pose as legitimate sites.
Whether the crooks ask directly in the email or on the fake web page, the goal is the same. They want victims to provide personal and financial information.
If you've experienced any monetary losses due to an IRS-related incident, report it to TIGTA. Also file a complaint with the FTC through its Complaint Assistant to make the information available to investigators.
Abusive Tax Schemes: Common abusive tax scams include anti-tax law (notably, the frivolous claims that federal tax collection is illegal), home-based business ruses, exploitive trusts, and off-shore schemes.
Report promoters of these types of schemes, or any other types you are aware of that are not listed here, by completing online Form 14242, Report Suspected Abusive Tax Promotions or Preparer.
If you prefer, you can or send a completed paper version of Form 14242 along with any promotional materials to the Lead Development Center via fax at (877) 477-9135 or by mailing it to —
Internal Revenue Service Lead Development Center
24000 Avila Road
Laguna Niguel, California 92677-3405
To avoid hiring a shady tax professional, the IRS urges you to watch for common warning signs, such as charging a fee based on the size of the refund.
Another major red flag is when the tax pro won't sign the preparer line on your return. Avoid these ghost preparers, who got that moniker due to their refusal to sign or include their IRS Preparer Tax Identification Number (PTIN), as required by law, on the 1040s they prepare. Never sign a blank or incomplete return.
If you do encounter a questionable tax preparer, the IRS wants to know.
You can report fraudulent activity or an abusive tax scheme by a tax return preparer or tax preparation company by filing Form 14157, Return Preparer Complaint.
If a tax return preparer filed a return or altered your return without your consent and you are seeking a change to your account, in addition to Form 14157 send the IRS Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.
Abusive Transactions: The breadth of abusive transactions, tax shelter schemes, and promotions has prompted the IRS to involve various divisions agency-wide in efforts to curb such activity. This includes the IRS Tax-Exempt and Government Entities Division of the IRS, as well as the office of Employee Plans.
Here are some of the more common abusive transactions and how to report them.
- Retirement plan transactions of IRS concern include certain specially-designed life insurance policies in retirement plans; the transfer of a life insurance contract from an employer or a tax-qualified plan to an employee; and excessive life insurance death benefits; and accelerated 401(k) deductions.
Report abusive retirement plan transactions to the IRS via email at [email protected], or by mailing the information to —
Internal Revenue Service
EP Tax Shelter Coordinator
31 Hopkins Plaza, Room 1542
Baltimore, MD 21201
- Tax-exempt organizations are sometimes used by for-profit entities as accommodation parties in abusive tax avoidance transactions. You can report such occurrences by filing Form 13909, Tax-Exempt Organization Complaint (Referral) Form, and mailing it to —
Internal Revenue Service
1100 Commerce Street
Dallas, TX 75242
Abusive Tax Shelters: If you are approached about using a tax shelter that doesn't seem right to you, trust your instincts and let the IRS know. The Office of Tax Shelter Analysis is primarily interested in potentially abusive transactions that may be employed by many taxpayers and could pose a significant compliance risk to the IRS.
You can provide the information, anonymously if you prefer, by emailing it to [email protected], faxing it to (844) 201-5535, or sending it via the U.S. Postal Service to —
Internal Revenue Service
1973 North Rulon White Boulevard
LB&I: OTSA - M/S 4916
Ogden, UT 84201
Tax Felon Friday: These are just a few of the questionable tax transactions and how to report them. Crooks and con artists have many, many more tricks they use to steal your identity and money, as well as defraud the IRS.
I can attest to that last part, as I've spent all this morning sorting through the various IRS web pages on tax schemes, scams, evasion, fraud, abusive transactions, shelters, and more, as well as the efforts by IRS Criminal Investigation to stop all of these actions.
The key thing for us taxpayers to remember is to stay alert. Then report any schemes and those who use or promote them to federal agencies so they can investigate and, where applicable, charge the perpetrators.
You can catch up on previous tax crime posts, including those that were published long before I gave them the ol' blog's special Tax Felon Friday designation, in the, what else, tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.
You also might find these items of interest:
- Getting an IP PIN is a smart taxpayer security move
- Watch for these data theft red flags, by tax and other financial crooks
- Online security missteps during the holidays could lead to identity theft and tax fraud
- More posts on identity theft and scams
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