Every year, a tax refund scam like this accounts for billions of dollars in losses. In 2014, identity theft topped the annual IRS list of tax refund scams. That year, identity theft affected over 17 million people and cost a whopping $15.4 billion. Although not all identity theft prompted the loss of tax refunds, tax-related crimes constituted a large percentage of total identity theft incidents that year. Tax-based identity theft scams have continued to plague honest taxpayers in recent years.…
Beware of promoters who claim that you can take tax deductions for personal expenses by setting up a home-based business. These promoters aggressively market and sell “tax reduction packages” which consist of a mangled interpretation of the Tax Code having no merit. The promoters may sound legit by advising you to maintain detailed records of the expenses. However, detailed records won’t convert personal expenses into deductible business expenses, nor does forming a trust or a corporation, nor the existence of…
Beware of emails or tweets claiming to be from the IRS—it may be a scam! Scammers who impersonate the IRS often use the name and logo of the IRS or U.S. Department of the Treasury to mislead you into believing the communication is legitimate. Generally, the IRS does not send unsolicited e-mails to acquire financial and personal information from taxpayers. Some scammers even set up phony websites to trick you into revealing personal and financial information when you respond, such…
“Sham trusts” are names given to certain trusts that the IRS claims are illegal. They can be either domestic or foreign trusts or both. The promoters of these trusts claim that they reduce or eliminate income taxes, but the IRS and the courts disagree and are aggressively pursuing taxpayers who own them and their promoters. The promoters charge high fees to set them up, but the structure doesn’t seem to have an actual business purpose other than evading taxes. The…
Beware of telemarketers and advertisers on radio and television who make claims that sound too good to be true and who claim that they can settle IRS claims for “pennies on the dollar”. To avoid getting ripped-off in these scams, be sure to use local tax professionals whenever you have IRS problems. Check the company’s website to verify that actual tax resolution professionals are employed, such as Enrolled Agents, CPAs, or tax attorneys in their firms. Most of the scam…
Don't fall victim to tax scams. Remember that if it sounds too good to be true, it probably is. Watch out for schemes that promise to reduce or eliminate taxes. Involvement with tax schemes can lead to imprisonment and fines. The IRS pursues and shuts down promoters of these and numerous other scams. Anyone pulled into these schemes can also face repayment of taxes plus interest and penalties. The IRS urges people to avoid these common schemes: Misclassifying worker status. …
