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12 Tax Scams You Should Know About
1. Phishing Phishing is when online thieves fool unsuspecting victims into giving up personal information they can then use to access your financial information. These criminals use the information you give to deplete your bank accounts, make purchases on your credit cards and obtain loans or credit in your names. Phishing schemes are emails that seem to come from a trusted source, like your bank or the IRS. Legitimate sources would never use e-mail to contact you about your personal financial issues. 2. Referring to the Economic Stimulus Payment Some crooks trick people into revealing personal financial information with promises about a “rebate.” They send you an email asking for certain information in order to issue you a payment. If you are told my e-mail, and sometimes through a phone call, that you can get a rebate by simply providing a bank account number or other personal information, this is a scam. Always remember that the only way to get any stimulus payment is to file a tax return. Be vigilant and protect your financial information. The IRS or any reputable government agency will never contact by phone or e-mail about a rebate or stimulus payment. 3. Silly Arguments If you are contacted to make ridiculous and unfounded claims to avoid paying taxes, this is a scam. Besides, the IRS already has a list of frivolous legal arguments if you make a submission based on any of them, you could get slapped with a $5,000 fine. Some of these silly positions include: misinterpretation of the 9th regarding military spending, false claims that you aren’t a person with a fiduciary relationship to the United States and therefore don’t owe taxes, etc. To see the entire list, go here. 4. Fuel Tax Credit The fuel tax credit is for farmers who use fuel for off-highway business purposes. However, some con artists are claiming that credit when it’s unreasonable. 5. Hiding Income in Offshore Accounts Hiding income in offshore bank and brokerage accounts is a way of avoiding taxes. It might seem like a sure thing, but the IRS is pursuing such promoters of abusive transactions. 6. Retirement Plans Some advisers encourage their clients to avoid the limitations on contributions to Roth IRAs by having them shift appreciated assets into Roth IRAs at less than fair market value. 7. Zero Wages Filing phony wage- or income-related information returns is another illegal way to avoid paying taxes. You should resist any temptation to participate in something that will result in jail and fines. 8. Refund and Abatement New filers are trying abate a tax through the Substitute for Return Program. Scammers use Form 843 to list reasons for the request and often use the reason: "Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service." 9. Return Preparer Scam Dishonest preparers of tax returns cause many problems for their clients. They skim part of their clients’ refunds and charge high fees for their services. They promise large refunds. Sometimes they encourage you to file fraudulent claims for refunds, so choose carefully when hiring a tax preparer. 10. Disguised Corporate Ownership Some con artists are forming domestic shell corporations in order to disguise the ownership of a company. State authorities are working with the IRS to identify these businesses and fine those responsible. 11. Misuse of Trusts Reject anyone who tries to get you to transfer assets into trusts. The promise of lower income taxes is too good to be true. 12. Charitable Organizations and Deductions Those who use charity to improperly shield income or assets from taxation are constantly being investigated by the IRS. Catherine Durkin Robinson is a contributing writer for BillSavings.com, your information resource and community for money-saving tips and offers so you can shop, compare, and save money on just about everything. Article Directory: http://www.articledashboard.com Internal Revenue Service tax scams you should know about misuse of trusts BillSavings.com |
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