Every year around this time of year, the Treasury Department releases their list of the various shenanigans that criminals and the like try to pull around taxes. Obviously, this activity peaks around now, and so it’s a very good idea to be on your guard.
Last week, the IRS completed their 2017 IRS Scams list, and though it isn’t substantively different from last year’s list, the tactics within each category keep evolving. Fortunately, with us in your corner, you don’t need to worry much about these.
But readiness is always something I encourage. These shenanigans include different ways that perpetrators would want to steal your personal information, scam you out of money or talk you into engaging in questionable behavior with your taxes.
And before I explain about these (and how to guard against them), I also wanted to ask you a favor…
Would you leave us a review on Yelp or Google Maps for other potential clients to see? We have found that these sources can be so helpful for people evaluating their options, and we would love to have as much information there as possible. Thank you!
Now, onto those dirty dozen…
The Top 12 2017 IRS Scams by Emelia Mensa
“Don’t think or judge, just listen.” -Sarah Dessen
Scammers are creative … but not THAT creative. As I mentioned, this list is similar to the one from last year.
And if they were so smart, they’d be doing something real, instead of criminal.
But knowing what to look out for is only the first step. After I describe these, I’ll give you a quick rundown on how never to get taken in.
This is the list — presumably in the order of most common first, and in the order in which the IRS described them.
Phishing: This is when people use tax time to try to get you to do something that might help them steal your personal info. Know this: The IRS will never initiate contact with taxpayers via email about a bill or refund. So don’t click on anything that says it’s from the IRS, because it almost certainly is not.
Phone Scams: This was much bigger last tax season, but in October 2016, one of the primary phone centers from which these calls originated was raided. But phone calls do continue, and it usually involves con artists threatening you with police arrest, deportation and license revocation, among other things. The IRS always initiates contact with you via postal mail and typically only contacts you via phone for an ongoing correspondence.
Identity Theft: This isn’t “tax related”, except that people like to steal SSN info, and file taxes before you do. Simple solution: file your taxes before the scammers file your taxes. We can help with that.
Return Preparer Fraud: Believe it or not, there are some tax pros who get set up with the IRS for purposes of stealing personal information and perpetrating refund fraud. The good news is that such tax professional outfits are pretty easy to spot. For one, they usually don’t keep in touch with their clients via a weekly blog. 😉
Fake Charities: This is when organizations set up shop for the purpose of soliciting (supposedly tax-free) donations. They imitate legitimate organizations and unsuspecting donors give them money. The IRS has a tool you can use called “Select Check” to ensure the organization you’re donating to is legit.
Inflated Refund Claims: Don’t have anyone prepare your taxes who asks you to sign a blank return or charges fees based on a percentage of your refund. This is a no-no.
Excessive Claims for Business Credits: There are two credits that the IRS is keeping an especially close eye on. One is the fuel tax credit, which is a tax benefit generally not available to most taxpayers and most often limited to off-highway business use, including use in farming. The other is the research credit. Research activities have to be scrupulously documented to qualify.
Falsely Padding Deductions on Returns: Basically, this is about lying on your return and improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. This problem, and the IRS trying to fix is, is why refunds were delayed this year for many.
Falsifying Income to Claim Credits: Sometimes con artists will try to get taxpayers to falsely claim income so they can qualify for the Earned Income Tax Credit. Basically again, don’t lie to the IRS.
Abusive Tax Shelters: Sometimes tax pros invent complicated schemes (usually involving insurance) to falsely enable clients to avoid paying any tax. If someone offers you a scheme that sounds too good to be true, check it with us.
Frivolous Tax Arguments: This is aimed at the crowd that claims that the income tax “has never properly been legislated” and so therefore nobody should have to pay any tax. You can understand why the IRS doesn’t dig that. Here’s their rundown on the various schemes: https://www.irs.gov/tax-professionals/the-truth-about-frivolous-tax-arguments-introduction
Offshore Tax Avoidance: Not a great idea these days. The Panama Papers, while fascinating, aren’t a guide for financial planning.
Now … in order to avoid this stuff, it’s actually quite simple.
1) Be skeptical. Don’t just take somebody’s word for it, especially if they are contacting you via phone.
2) Don’t reply to (or click on) emails, calls or other communication without first confirming that the source and sender is legitimate. If you get something that seems hinky, check with us.
3) Did I mention that you can check with us? Sure, you can go to the source itself (the IRS), but this is after all what we are here for.
Allow us to serve you well.
To your family’s lasting financial and emotional peace…
Emelia Mensa CPA