Scam Prevention and Avoidance
Don't be the victim of a financial or identity theft scam.
As the complexity of the tax code grows, more people look for ways to avoid paying taxes. As technology expands, in communication methods, to online tax filing, to tax software programs, so increases the number of opportunities to scam the taxpayer - or the government.
Below is a list of some of the most common tax and identity scams out there.
The W-2 Scam
Payroll and HR departments and professionals need to know about a new phishing email scam that pretends to be from company management or ownership and asks for personal information on employees. The email will usually contain the name of the company president or CEO. In this particular scam, the email asks for a list of employees and personal information, including Social Security numbers.
Various Cyber Scam
There are many scam emails going about, pretending to come from the IRS. These communications may ask for information related to filing status, refunds, confirming personal information, and verifying PIN information.
There may be links in the email that send you to a website that looks legit, perhaps a fake IRS.gov site. The website will ask for further personal information, like your Social Security numbers. You could also get harmful virus from interacting with these websites. So, if you get an email from the IRS, don't act on it. The IRS doesn't conduct business by email. They use the US Postal Service for the majority of all communications. And good old fashioned fax. Yes, those are still around.
The Fuel Credit Scam
All tax payers must avoid false claims for fuel tax credits. These credits are normally limited to off-highway business use, including use in farming. The IRS is on the lookout for unusual claims for the credit.
The bogus Charity Scam
Be on the look out for supposed charities that are attempting to solicit donations and offer tax credits. Go to a site like charitynavigator.org to see if your charity is legit.
The Frivolous Argument Scam
Taxpayers (or in this case, non-payers) should avoid using frivolous tax arguments to avoid paying tax. There are many frivolous schemes out there, making outright crazy claims about why we don't need to pay taxes. Don't fall for it! Not one of these has won in court and don't think you are going to be the first. You will end up paying more in the end, and maybe even go to jail.
The bogus Return or 1099 Scam.
Filing a bogus 1099 in order to reduce the amount the IRS think you made is illegal. Don't do it! And if yo have someone filing your taxes for you and they suggest this as a way to avoid paying, or even to get a bigger refund, don't do it!
The Phishing Scam
You need to watch out for identity theft scams, in particular near tax season. Criminals want your information to file fraudulent returns, and getting fraudulent refunds. Always safeguard your Social Security number.
The Tax Shelter Scam
You should avoid abusive tax structures to avoid paying taxes. The IRS has made great headway in identifying complex financial products that have no purpose except for the hiding of money. If you are doing something outside the law to hide money, stop. The IRS will find you out.
The Tax Credit Scam
You must not invent income to falsely claim tax credits. Bad tax preparers have gone to jail for this, and the taxpayer is left paying back the money plus penalties and interest..
The Phone Scam
Thousands upon thousands of Americans, and many of our clients, have received and ominous phone calls by someone impersonating an IRS agent. The calls often threaten police arrest, deportation, license revocation and other things. If you get a call like this hang up and call the IRS back directly from the number listed on IRS.gov.
The IRS will not call and demand immediate payment without first having mailed you a bill. They won't demand you pay taxes without opportunity for appeal. They cannot require you to use a specific payment method. They will not ever request credit card information over the phone. And The IRS will definitely not threaten to bring in local police or other law-enforcement groups to have you arrested for not paying. The IRS is bad but not that bad.