Laura J. Hanlon
CPA
pexels-photo-64778.jpeg

Blog

New Strategy Posts for your Finances

Dirty Dozen Tax Scams

The Top 12 Tax-Related Scams of 2017
"Don't think or judge, just listen." -Sarah Dessen

Scammers are creative ... but not THAT creative. As I mentioned, this list is similar to the one from last year.

And if they were so smart, they'd be doing something real, instead of criminal.

But knowing what to look out for is only the first step. After I describe these, I'll give you a quick rundown on how never to get taken in. 

This is the list -- presumably in the order of most common first, and in the order in which the IRS described them.

Phishing: This is when people use tax time to try to get you to do something that might help them steal your personal info. Know this: The IRS will never initiate contact with taxpayers via email about a bill or refund. So don't click on anything that says it's from the IRS, because it almost certainly is not.

Phone Scams: This was much bigger last tax season, but in October 2016, one of the primary phone centers from which these calls originated was raided. But phone calls do continue, and it usually involves con artists threatening you with police arrest, deportation and license revocation, among other things. The IRS always initiates contact with you via postal mail and typically only contacts you via phone for an ongoing correspondence.

Identity Theft: This isn't "tax related", except that people like to steal SSN info, and file taxes before you do. Simple solution: file your taxes before the scammers file your taxes. We can help with that.

Return Preparer Fraud: Believe it or not, there are some tax pros who get set up with the IRS for purposes of stealing personal information and perpetrating refund fraud. The good news is that such tax professional outfits are pretty easy to spot. For one, they usually don't keep in touch with their clients via a weekly email. ;)

Fake Charities: This is when organizations set up shop for the purpose of soliciting (supposedly tax-free) donations. They imitate legitimate organizations and unsuspecting donors give them money. The IRS has a tool you can use called "Select Check" to ensure the organization you're donating to is legit.

Inflated Refund Claims: Don't have anyone prepare your taxes who asks you to sign a blank return or charges fees based on a percentage of your refund. This is a no-no.

Excessive Claims for Business Credits: There are two credits that the IRS is keeping an especially close eye on. One is the fuel tax credit, which is a tax benefit generally not available to most taxpayers and most often limited to off-highway business use, including use in farming. The other is the research credit. Research activities have to be scrupulously documented to qualify.

Falsely Padding Deductions on Returns: Basically, this is about lying on your return and improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. This problem, and the IRS trying to fix is, is why refunds were delayed this year for many.

Falsifying Income to Claim Credits: Sometimes con artists will try to get taxpayers to falsely claim income so they can qualify for the Earned Income Tax Credit. Basically again, don't lie to the IRS.

Abusive Tax Shelters: Sometimes tax pros invent complicated schemes (usually involving insurance) to falsely enable clients to avoid paying any tax. If someone offers you a scheme that sounds too good to be true, check it with us.

Frivolous Tax Arguments: This is aimed at the crowd that claims that the income tax "has never properly been legislated" and so therefore nobody should have to pay any tax. You can understand why the IRS doesn't dig that. Here's their rundown on the various schemes: https://www.irs.gov/tax-professionals/the-truth-about-frivolous-tax-arguments-introduction
 
Offshore Tax Avoidance: Not a great idea these days. The Panama Papers, while fascinating, aren't a guide for financial planning. 

Now ... in order to avoid this stuff, it's actually quite simple.

1) Be skeptical. Don't just take somebody's word for it, especially if they are contacting you via phone.

2) Don't reply to (or click on) emails, calls or other communication without first confirming that the source and sender is legitimate. If you get something that doesn't seem right, check with us.

3) Did I mention that you can check with us? Sure, you can go to the source itself (the IRS), but this is after all what we are here for.

Allow us to serve you well.

To your family's lasting financial and emotional peace, Laura...
 

Laura Hanlontaxes, tax, irs