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IRS Dirty Dozen Scams

January 2016

(.pdf version)

Each year, people fall prey to tax scams . That's why the IRS sends a list of its annual "Dirty Dozen. " Stay safe and  informed - don't  become a victim.

Identity theft. Identity theft, especially  around tax time, is at the  top  of the  "Dirty  Dozen"  list. The IRS continues to  aggressively pursue criminals who file fraudulent  returns using someone else's Social Security number. The IRS is making progress on this front. Awareness is key to  avoid becoming a victim.

Telephone scams. Threatening phone calls by criminals impersonating IRS agents remain an ongoing threat . The IRS has seen a surge of these phone scams in recent years, as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding  payment.

Phishing. Typically use unsolicited emails or fake websites that appear legitimate but  are attempting to steal your personal information. The IRS will not send you an email about  a bill or tax refund out  of the  blue. Don't click on strange emails and websites.

Return Preparer Fraud About 60 percent of taxpayers use tax professionals to prepare their returns. While  most tax professionals  provide  honest , high-quality service, there are some dishonest ones who set up shop each filing season to perpetrate refund fraud, identity theft and other scams . Be on the lookout for unscrupulous tax return preparers. Choose your preparer wisely.

Offshore Tax Avoidance. Hiding money and income offshore is a bad b et. If you have money in offshore banks, it's best to contact the IRS to get your taxes in order. The IRS offers the Offshore Voluntary Disclosure Program to  help you do  that .

Inflated Refund Claims. Be on the lookout for anyone promising inflated tax refund  s. Also be wary of anyone who asks you to sign a blank return, promises a big refund before looking at your tax records or charges fees based on a percentage  of the refund . Scam artists use flyers, advertisements, phony store fronts and word of mouth via trusted  community  groups to  find victims.

Fake Charities. Be  on  guard  against  groups  masquerading  as  charitable  organizations to attract donations from unsuspecting contributors. If you are  making  a charitable contribution, you should take  a  few  extra  minutes  to  ensure  your  hard-earned  money goes to legitimate  and currently  eligible charities.  IRS . gov  has the  tools  you need to check  out  the  status  of  charitable  organizations. Be  wary  of  charities  with  names that are  similar  to  familiar  or  nationally-known organizations.

Falsely Padding Deductions on Returns. Don't give in to the temptation to inflate deductions or expenses on your tax ret urn. Think twice before overstating deductions such as charitable contributions, inflating claimed business expenses or including credits that you are not entitled to receive, such as the Earned Income Tax Credit or Child Tax Credit. Complete an accurate return.

About the Author
Sean Tesoro

Sean Tesoro

President, Salem Five Financial

Sean joined Salem Five in 2008 as President of Salem Five Financial. He brings with him over 20 years in financial services and has held officer positions with a range of investment companies, including Putnam Investments, Sunlife Financial, and MassMutual.

Prior to joining Salem Five, Sean was the Chief Operating Officer for Colonial Brokerage, the investment company of Colonial Bank. He was named an Emerging Leader by the Boston Business Journal in 2011, and in 2015 he was recognized by Bank Investment Consultant as one of the top 50 Program Managers in the country. He received his bachelor’s degree from Yale University.

Outside of the office, Sean volunteers at St. Agnes Parish in Reading and Cradles to Crayons in Brighton. He lives in Reading with his wife and three children.

 

Specialties:

  • Market Trends and Conditions
  • Retirement Income Planning