NDSU Extension Service - Ramsey County


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Top 12 Tax Schemes

Top 12 Tax Schemes


From IRS impersonators to tax preparers behaving badly, scammers are on the prowl this tax season. For 2014, following are the top 12 schemes, the IRS is warning taxpayers about.

1. Identity Theft - The IRS continues to be overwhelmed by identity theft, which occurs when a fraudster uses someone else's name and social security number to claim refunds.  While the agency has been working to reduce the number of fraudulent claims on the issue, it still paid out nearly $4 billion in fraudulent refunds last year.  If you receive a notice from the IRS saying that more than one return has been filed under your name, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

2. Phone scams:  An old scam that is back again is where fraudsters call and pretend to be from the IRS. Some callers demand tax payments and even threaten arrest or other law enforcement action if the person refuses. They may even hang up and call back pretending to be the police. Others tell victims they are owed large refunds and ask for personal banking information in order to steal their identity.

          3. Phishing: If you receive an e-mail that appears to be from the IRS and asks for personal information, it's most likely a phishing scam that wants your identity and your money. The IRS does not reach out to taxpayers via e-mail, texts or social media.  

4. "Free Money" ads promising "free money" from the IRS or anyone offering a refund that sounds too good to be true. These fraudsters will then demand an up-front to recover your money.  They and your money are quickly gone with no refund on its way.

5. Return preparer fraud - From inventing extra children to stealing identities, some preparers are bad news.  Make sure your tax preparer has an IRS Preparer Tax Identification Number (PTIN). If a preparer doesn't put this number on your tax return as required, or fails to sign the form, that should raise a red flag.

6. Hiding income offshore – Once thought of as a tax strategy for only the rich, fraudsters can promote illegal accounts for any amount of money.  If you are the owner of a legitimate account abroad, and properly complete the reporting requirements, there is nothing illegal.  But if you fail to disclose assets held in offshore accounts, you can risk huge penalties.  

          Next week, 7-12 of the top 12 tax scams.

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