Don’t Fall Prey to the 2011 Dirty Dozen Tax Scams

In a new press release, the IRS warns taxpayers of twelve tax scams to avoid this year.

From IRS.gov:

“The Dirty Dozen represents the worst of the worst tax scams,” IRS Commissioner Doug Shulman said. “Don’t fall prey to these tax scams. They may look tempting, but these fraudulent deals end up hurting people who participate in them.”

The IRS works with the Justice Department to pursue and shut down perpetrators of these and other illegal scams. Promoters frequently end up facing heavy fines and imprisonment. Meanwhile, taxpayers who wittingly or unwittingly get involved with these schemes must repay all taxes due plus interest and penalties.

Following is the Dirty Dozen for 2011:

Hiding Income Offshore

The IRS aggressively pursues taxpayers involved in abusive offshore transactions as well as the promoters, professionals and others who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks, brokerage accounts or through the use of nominee entities. Taxpayers also evade taxes by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or insurance plans.

In early February, the IRS announced a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011. The IRS decision to open a second special disclosure initiative follows continuing interest from taxpayers with foreign accounts. In response to numerous requests, information about this initiative is available on IRS.gov in eight different languages, including: Chinese, Farsi, German, Hindi, Korean, Russian, Spanish, and Vietnamese.

More at IRS.gov...

‘Tis the Season: Don’t Fall Victim to Tax Scams

IRS impersonation schemes run rampant during tax season. The scam-artists running these schemes are out to steal your personal identification information. Because these schemes could take place through email, phone, fax, internet sites and even your social networking sites, you need to be very cautious. Here is what you need to know to avoid these scams:

• The IRS will never send you unsolicited e-mails about your personal tax situation, tax accounts or other tax issues. If you receive such an e-mail, it is most likely a scam.
• Some impersonations may even go so far as to be an actual commercial internet site that you might happen to visit thinking you’re accessing the official IRS Web site. Such sites have no connection to the IRS and are trying to trick people into revealing personal and financial information, or trying to access your financial accounts.
• Some email scams could contain links or attachments that ultimately download malicious code (a virus) that will infect your computer, trying to access your personal information and passwords that way, or they may direct you to a bogus “IRS” form or website when you click on them.
• If you get such an e-mail, delete it immediately, and don’t get lured by bogus site.
• If you are directed to what seems to be an IRS site asking for your information, it never hurts to exit out of the window and open a new window where you can actually type in the IRS’s website yourself. Once at the official IRS website, you can perform a search for the web-page you were previously viewing.

I hope these tips help you to steer clear of those seeking to take advantage of unsuspecting taxpayers.

Avoiding Tax Scams

Tax schemes can lead to many problems for taxpayers. So, here is my best advice on how to avoid tax scams this tax season:

• Be cautious of any unsolicited e-mails or phone calls asking for personal information – they are usually fraudulent.
• Be suspicious of anyone contacting you from a company with whom you have a bank or credit card account. If they ask for information, do not give it out. Call the company separately by using the contact number on your statement or back of your credit card.
• Remember that the IRS will not call you on the telephone and ask for bank or credit card information.
• Remember that the IRS will never e-mail you. Taxpayers who receive unsolicited e-mail that claims to be from the IRS can forward the message to a special electronic mailbox, phishing@irs.gov. They can use instructions contained in an article titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes” located at the IRS website. Remember: the only official IRS Web site is located at www.irs.gov.
• If you receive an e-mail which contains an official looking logo does not mean it is one. Always verify before providing any personal data, bank accounts or credit card information.
• Verify the authenticity of information received by contacting the IRS, your tax preparation service, or your bank. Use the contact number provided in your local phone book or known Web site that is provided in your bank statement.

In addition, if you are a victim, report it immediately. Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The identity of the person filing the report can be kept confidential.

If you believe you are a victim of tax fraud, also contact the credit bureau and place a fraud alert on your account. Putting a fraud alert on your credit file is one of the first things you should do if you suspect someone is trying to open credit accounts in your name. When someone tries to open up a credit account in your name by getting a new credit card, car loan, cell phone, etc., the lender should contact you by phone to verify that you really want to open a new account. If you are not reachable by telephone, the credit account should not be opened. This might be something you want to do, even if you do not think identity theft is an immediate threat.