The IRS dirty dozen list of tax scams

Dear Bonnie, This morning I got a phone call from an IRS agent saying I needed to immediately pay my taxes or they would call the police and have me arrested. He wanted me to get a prepaid debit card to pay with. I didn’t think I owed any taxes in fact I’m supposed to get a refund. Will they take my refund away? Mark, Glen Ellen

Dear Mark, First of all, the IRS will never call you on the phone to collect on any tax debt. This is a tax scam that has been going around for some time now. If they call back, hang up. Fraudsters prey on people’s fear of the Internal Revenue Service to achieve their felonious ends. And many fall victim to their schemes. Don’t be one of them! Here is a list of the most common scams:

Identity theft: Taxpayers need to watch out for identity theft especially around tax time. Someone may use your Social Security number to file for a refund. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. If you have been a victim of identity theft, contact the IRS. They will flag your account and assign you a PIN number. After that, the IRS will not accept an electronically filed tax return unless this PIN number is used.

Phone scams:  The IRS will never call you unless you are in direct contact with a specific agent and have agreed to a phone call. These scam artists call and threaten with arrest, deportation, license revocation among other actions unless immediate payment is made of an outstanding “tax bill.” Like I said, simply hang up. They only want to clean out your bank account.

Phishing: The IRS doesn’t send out e-mails to taxpayers, either. If you get one, forward it to phishing@irs.gov. The IRS will hunt down the scoundrel and put him out of business. I received a rash of emails one year attempting to retrieve my banking information. The sender thanked me for my electronic tax payment, which I had actually just made but indicated that I needed to confirm my banking information. It provided a link to take me to the “IRS website” so I could type in everything they needed for their shopping spree. Don’t click on a link claiming to be from the IRS nor should you open any attachments. It’s nothing more than a ruse to steal banking information and identity as well.

Return preparer fraud: Most tax professionals are honest. However, the IRS says “but there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers.” Always shop for a tax professional who has a history in the community. Referrals by satisfied friends and family is normally the best route.

Inflated refund claims: This scam ties in with the one above. Does your tax preparer ask that you sign a blank return, promises a big refund before looking at your records, or charges fees based on a percentage of the refund? Walk away. The IRS says, “Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups where trust is high to find victims.”

Fake charities: The IRS says, “Be on guard against groups masquerading as charitable organizations to attract 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 and currently eligible charities.”

Abusive tax shelters: Don’t use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The IRS states, “be on the lookout for people peddling tax shelters that sound too good to be true.” If you are offered an oddly structured financial investment, it is best to discuss the structure with your attorney as well as your tax professional to determine its legitimacy and to find out if you will gain any tax benefit. Nothing worse than finding out on April 15 that you have a loss that isn’t even deductible!

Frivolous tax arguments: The IRS states, “Don’t use frivolous tax arguments in an effort to avoid paying tax. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.” This is how Wesley Snipes ended up serving time.