This year’s edition of the Dirty Dozen features many repeat offenders, but some feature a new twist to them. Ranging from personal attacks to fraudulent, shady behavior, check out the top 12 scams as ranked by the IRS for 2019!

IRS Tax Scams

The IRS releases an annual list of some of the most common tax scams and fraud committed throughout the year, known as the Dirty Dozen. This year, it includes a variety of scams. These include situations where someone is targeted and scammed by another individual, scenarios where someone will intentionally omit or falsify information on their financial statements and tax returns (scamming the IRS), and instances where your tax preparer might commit a tax scam (on you!).

Personal Attacks

  • Phone Phishing – This year we’ve seen an increase in phone scams, especially with scammers impersonating an IRS agent to intimidate someone into giving up money. Often times the caller will threaten you until you pay, pressuring you to make a payment on the spot.
  • Internet Phishing – Similar to phone phishing, internet phishing involves being contacted through internet channels by scammers pretending to work for the IRS. Common ways you can be contacted are through social media, emails, and even texts to your mobile phone!
  • Abusive Schemes – Scammers will often create complex schemes to trick you into giving up money and information. These include tax shelters, conservation easements, and trusts.
  • Identity Theft – Identity theft manages to find it’s way on the list every year. The IRS has taken significant measures to combat this, but they encourage everyone to be vigilant about keeping an eye out for any potential scams where one could steal your identity.
  • Fraudulent Charities – The IRS has identified that there are scam artists that pose as a charity, receiving donations and other information from unsuspecting people. Because it isn’t a real charity, the donations aren’t deductible, and the donor won’t receive their donation back!

Shady Behavior

  • Business Credits – This scam tends to find itself on the list year after year. It’s no surprise, seeing that many taxpayers will find any avenue to avoid paying taxes. Claiming a business credit has often been an easy way to hide an expense under the cover of a business expense. The IRS has taken note of this, making the requirements to claim credits strict and clear. Despite this, people still manage to try to make false claims on their returns.
  • Overstating Deductions – Similar to claiming incorrect business expenses, a taxpayer might claim a deduction higher than it actually should be. They may report that they made charitable contributions or incurred medical expenses that never happened. In some scenarios, one might even claim a credit they aren’t eligible for.
  • False Documents & Incorrect Income – This is a scam as old as time itself! When filing taxes, a person might state they earned more income than they actually did. They do this with the purpose of increasing the value of the income tax credit they’ll receive. Someone might also make a fake document to hide side income, saying it can only be withdrawn from to pay debt.
  • Hidden Offshore Funds – Although it may sound like a cliche, hiding income in offshore bank accounts is a legitimate scam. Hiding any form of assets out of the United States to avoid paying taxes on it is illegal.
  • Excuses to Avoid Payment – In the event someone does end up having to pay taxes, they might outright lie and make ridiculous excuses to avoid having to pay up. The problem with this is that this person will end up going to court and losing. On top of paying their original tax, they might get slapped with an additional penalty.

Tax Preparation

  • Preparation Fraud – This type of scam involves fraud on the part of whomever you decide to have prepare your taxes. While those that prepare your taxes are supposed to follow the law, some of them are, in fact, scam artists. Rather than correctly preparing your taxes and saving you money, they may steal your identity and refund from you!
  • Fake Refunds – Tax preparers can also scam people through lying about the value of a tax refund one will receive. The scamming preparer will pocket some or all of the refund for himself. The targets of this scam are usually people who don’t need to file a return, like those with low income situations and older folks.

Prevent Fraud

When it comes time to prepare your taxes, it can be hard to know who to trust in the digital world we live in today. You can do your best to make sure you’re staying within the law but, if you file your taxes with a scam artist, you’re going to end up hurt and out of a refund.

As long as business exists, there will always be someone who wishes to gain something for free. These are the people who become scammers, stealing valuable information and money from you for their own personal gain. They might use internet or phone phishing methods to bully and trick you or even steal your identity if they find enough information!

There is also an element of personal responsibility for anyone who files taxes to refrain from committing fraud themselves. When paying taxes, there may be a temptation to claim business credits or expenses for which you aren’t eligible. While it may seem like a good idea to reduce the tax you pay, if you are audited and discovered, you’ll end up paying even more in penalties.

It’s actually fairly simple to avoid scams like these. By consulting and using the services of reputable, professional accounting services, you can rest easy knowing that your taxes are being done right.

Here at the Evergreen CPAs, we can look at your tax situation and help you file so that you have all the proper deductions and credits applied to save you the most money possible! Through partnering with a team of caring, dedicated tax experts, you’ll avoid any accidental errors and hungry sharks looking out for only themselves!