IRS Warns of Taxpayer Scams

Don’t Take the Bait!

Every tax season sees financial predators baiting countless Americans using promises of large refunds to scam honest taxpayers out of millions of dollars.

To arm the public to recognize and reject such scams the IRS releases its annual “Dirty Dozen” scams list. While the weeks between the New Year and April 15 see more scams related to filing tax returns, you can encounter any of the Dirty Dozen any time of the year. Here’s a few of them:

  • Free money from the IRS: Some ads claim that you can file a tax return with little or no documentation for a fee. The IRS says flyers pitching these scams have been appearing near churches, and target seniors and low-income individuals. Victims learn their claims are rejected, while the scammer – and their money – is long gone.
  • Identity theft: This is one of the faster-growing scams where a scammer uses a taxpayer’s personal information to file a tax return and claim a fraudulent refund. More than $1.4 billion nearly made it into the wrong hands in 2011, and victims first learn their identity has been stolen by an IRS notice.
  • Misuse of trusts: Scammers have been urging taxpayers to transfer their assets into trusts for a while now. They promise a reduction in your income subject to taxes, or a reduction in your estate or gift taxes. They’re also used to deduct personal expenses, but they’re used mostly to hide assets from the IRS, which more often than not finds out.
  • Phishing: Watch out for unsolicited emails or fake websites that prompt you to provide personal financial information. Make sure any site or offer is legitimate, or your identity – and life savings – will end up in someone else’s hands.

While the IRS is working to fight scams, they’re also out to collect from taxpayers who owe back tax debt. Bank levies and wage garnishments are two of the tools the IRS uses against people who owe back taxes.

But a tax attorney can help you mediate your back tax debt and possibly obtain a settlement that works in your favor, which can help protect your real – and financial – identity.

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