TSCPA News

Phone Scams and Phishing Schemes Top IRS's "Dirty Dozen" List of Tax Scams

March 22, 2018

Concluding this year's annual "Dirty Dozen" list of tax scams, the IRS warns taxpayers to remain vigilant about these aggressive and evolving tax schemes throughout the year.

This year's “Dirty Dozen” list highlights a wide variety of schemes that taxpayers may encounter throughout the year, many of which peak during tax-filing season. The schemes can run the gamut from simple refund inflation scams to technical tax shelter deals. A common theme throughout these: Scams put taxpayers at risk.

Taxpayers need to guard against ploys to steal their personal information. And they should be wary of shady promoters trying to scam them out of money or talk them into engaging in questionable tax schemes.

Taxpayers are encouraged to review the list in a <a title="Dirty Dozen" href="https://www.irs.gov/newsroom/dirty-dozen" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="83b4736e-a749-4218-8f93-f19dd35d8250">special section on IRS.gov and be on the lookout for these con games throughout the year. People that participating in illegal schemes can lead to significant fines and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Taxpayers should always keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer. For more see the <a title="Choosing a Tax Professional" href="https://www.irs.gov/tax-professionals/choosing-a-tax-professional" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="6e27148c-9038-4367-80e6-1c72fcd98636">Choosing a Tax Professional page.

Here is a recap of this year's "Dirty Dozen" scams:

  1. Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (<a style="font-size: 16px;" title="Phishing Schemes Make IRS ‘Dirty Dozen’ List of Tax Scams for 2018; Individuals, Businesses, Tax Pros Urged to Remain Vigilant" href="https://www.irs.gov/newsroom/phishing-schemes-make-irs-dirty-dozen-list-of-tax-scams-for-2018-individuals-businesses-tax-pros-urged-to-remain-vigilant" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="10a04fe3-6fec-4c70-bdab-a6748b193af6">IR-2018-39)
  2. Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (<a style="font-size: 16px;" title="Phone Scams Pose Serious Threat; Remain on IRS ‘Dirty Dozen’ List of Tax Scams" href="https://www.irs.gov/newsroom/phone-scams-pose-serious-threat-remain-on-irs-dirty-dozen-list-of-tax-scams" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="09dff34b-2603-4c97-823a-e0ff12e60bcc">IR-2018-40)
  3. Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in the Security Summit partnership with the states and the tax industry, has made major improvements in detecting tax return related identity theft during the last two years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number. (<a style="font-size: 16px;" title="Despite Major Progress, Identity Theft Still on IRS ‘Dirty Dozen’ Tax Scams List" href="https://www.irs.gov/newsroom/despite-major-progress-identity-theft-still-on-irs-dirty-dozen-tax-scams-list" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="a9eb5540-2f6d-4264-932d-3a128eb38cda">IR-2018-42)
  4. Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuating refund fraud, identity theft and other scams that hurt taxpayers. (<a style="font-size: 16px;" title="Tax Return Preparer Fraud Ranks on 2018 ‘Dirty Dozen’: Taxpayers Urged to Choose Reputable Tax Preparers" href="https://www.irs.gov/newsroom/tax-return-preparer-fraud-ranks-on-2018-dirty-dozen-taxpayers-urged-to-choose-reputable-tax-preparers" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="c4efa2df-90d6-4bae-b459-506947d1d7a2">IR-2018-45)
  5. Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (<a style="font-size: 16px;" title="Fake charities make 2018 ‘Dirty Dozen’ list; taxpayers should be alert to scams involving disasters, worthwhile causes" href="https://www.irs.gov/newsroom/fake-charities-make-2018-dirty-dozen-list-taxpayers-should-be-alert-to-scams-involving-disasters-worthwhile-causes" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="f3d2515c-805c-4467-b7a6-bf62ea4b2683">IR-2018-47)
  6. Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high. (<a style="font-size: 16px;" title="Taxpayers alerted against falsely inflated refunds in ‘Dirty Dozen’ list; Seniors, many others at risk" href="https://www.irs.gov/newsroom/taxpayers-alerted-against-falsely-inflated-refunds-in-dirty-dozen-list-seniors-many-others-at-risk" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="7f02e409-ae72-4331-89fa-d348c45b1e92">IR-2018-48)
  7. Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses. (<a style="font-size: 16px;" title="IRS ‘Dirty Dozen’ list of tax scams for 2018 contains warning to avoid improper claims for business credits" href="https://www.irs.gov/newsroom/irs-dirty-dozen-list-of-tax-scams-for-2018-contains-warning-to-avoid-improper-claims-for-business-credits" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="8f465b1a-8924-48ab-b45a-e36f2eb7940b">IR-2018-49)
  8. Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit. (<a style="font-size: 16px;" title="Falsely padding deductions highlighted in IRS 2018 ‘Dirty Dozen’ tax scams" href="https://www.irs.gov/newsroom/falsely-padding-deductions-highlighted-in-irs-2018-dirty-dozen-tax-scams" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="6591e7a0-6469-41d5-9cba-53c0f3e705f3">IR-2018-54)
  9. Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. (<a style="font-size: 16px;" title="Falsified income, fake Forms 1099 part of IRS ‘Dirty Dozen’" href="https://www.irs.gov/newsroom/falsified-income-fake-forms-1099-part-of-irs-dirty-dozen" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="0372f186-67cc-402f-a216-0a310d3c83ba">IR-2018-55)
  10. Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (<a style="font-size: 16px;" title="IRS warns against frivolous tax arguments; Part of ‘Dirty Dozen’ scams list" href="https://www.irs.gov/newsroom/irs-warns-against-frivolous-tax-arguments-part-of-dirty-dozen-scams-list" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="23d837c3-a3a0-4484-8dac-50be1dc783e1">IR-2018-58)
  11. Abusive Tax Shelters: Abusive tax structures are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (<a style="font-size: 16px;" title="IRS 2018 ‘Dirty Dozen’ tax scams: Abusive tax shelters make the list " href="https://www.irs.gov/newsroom/irs-2018-dirty-dozen-tax-scams-abusive-tax-shelters-make-the-list" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="3aeeb2ba-c6f3-48ff-9006-765d44ccd461">IR-2018-62)
  12. Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (<a style="font-size: 16px;" title="IRS: Offshore tax cheating remains on ‘Dirty Dozen’ list of tax scams" href="https://www.irs.gov/newsroom/irs-offshore-tax-cheating-remains-on-dirty-dozen-list-of-tax-scams" data-entity-substitution="canonical" data-entity-type="node" data-entity-uuid="371896aa-b9c1-41c6-a01d-fa2c79475764">IR-2018-64)