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  • Daniel Rodriguez

Understanding & Avoiding the First Six Tax Scams of the IRS’s 2016 Dirty Dozen List

Taxpayers have more than enough to worry about when it comes to complying with their income tax and offshore tax obligations. However, due to the authority wielded by the IRS, taxes are often fertile ground for scammers and fraudsters attempting to take advantage of honest individuals who want to simply satisfy their tax duty. In recent years the number and sophistication of tax scams have increased greatly. As part of the IRS’s annual effort to combat tax fraud, it has released a list of tax scams. For more information on any tax concerns you might have, contact a Sacramento tax lawyer of NewPoint Law Group, LLP.

1.      Stolen Identity Tax Return Fraud

Identity theft-related tax fraud or tax scams are the biggest threat to the integrity of the tax system and a taxpayer’s ability to file their taxes without issue this year. Typically, a scam of this type is accomplished when a fraudster obtains sensitive personally identifiable information about a taxpayer. Most often the information used is the taxpayer’s Social Security number.  They then use this information to file a false tax return showing a refund and obtain a government check in your name. Needless to say, this creates a nightmare for the taxpayer to clean up.

2.      Fake IRS Phone Calls

Due to the power wielded by the IRS and the momentary panic upon hearing that the IRS is calling, many people drop their guard. The caller may even threaten to send the police. In many cases, these individuals end up providing scammers with personal data or significant sums of money. Remember: the IRS cannot take action against your without providing due process under the law regardless of what the caller states. If you have questions, call a tax professional.

3.      Online Phishing through E-mail

In a high-tech variation on the phone scam approach, a scammer may claim to represent the IRS through e-mail. He or she may provide a badge number or other seemingly legitimate details. But remember, the IRS does not contact taxpayers through e-mail.  Related scams may see the scammer pose as a representative from the U.S. Treasury or tax preparation software providers. They may promise a tax refund if you provide personal information or demand payment for supposedly unpaid tax bills. If you receive an e-mail of this type you can forward it to Also, it may provide peace of mind to consult with an accountant or tax attorney.

4.      Fraud Committed by Tax Preparers

While most tax preparers are upstanding individuals and seek to maintain compliance with the U.S. Tax Code, there are often a few bad apples whose better judgement is overrun by greed or other reasons. If a tax preparer guarantees a refund amount or the highest refund possible without ever even looking at your taxes, that is often a red flag. Likewise, if the preparer refuses to sign the return and provide his or her IRS Preparer Tax Identification Numbers (PTINs), that is another red flag. Remember, tax returns are filed under the penalty of perjury and the taxpayer is liable for what they certify on their forms. So, use caution when selecting a preparer.

5.      Offshore Tax Evasion

Despite repeated pronouncements from Congress, the IRS, and the Treasury Department stating that offshore tax enforcement is and has been a priority, some taxpayers still attempt to make use of foreign entities and trusts to conceal income and assets. Unfortunately for these individuals, the above-named entities have enacted number of programs and initiatives to identify and prosecute individuals who attempt to evade taxes through this method. Aside from required FBAR and FATCA disclosures, the Swiss Bank Program, international information sharing agreements to implement FATCA, John Doe summons, and other measures all provide U.S. authorities with information from more than 100 nations. If you have foreign accounts, there is a good chance the federal government has the informational resources to discover it.

6.      Taxpayers Who Inflate Their Claims for Tax Refunds

Like with most tax scams, taxpayers who fall for this claim can not only end up providing the scammer significant sums of money, but may also be subject to a penalty for filing a false return or claiming a fraudulent refunds. Furthermore, participating in this scam can, in some cases, disqualify the participant for federal benefits. This scam has a number of variations, but most often centers around making false or inflated claims regarding education benefits, Earned Income Tax Credits (EITC), American Opportunity Tax Credits, and education credits.

Rely on a Sacramento Tax Attorney of NewPoint Law Group, LLP

Taxpayers who handle their own taxes must be on guard for tax scams and other fraud. In many cases, the complexity of the tax code and the potentially numerous fraud attempts make it prudent for a taxpayer to work with a tax professional. Contact a Sacramento tax audit attorney from the NewPoint Law Group, LLP today by calling 800-358-0305 or contact us online to schedule a free consultation.

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