IRS releases 'Dirty Dozen' tax scam list
The Phoenix offices of the Internal Revenue Service Wednesday released the "Dirty Dozen" tax scams taxpayers need to avoid.
In the new 2003 ranking, IRS officials said, several new scams have reached the top of the consumer watch list, including offshore banking and identity theft schemes.
"With the tax season in full swing, we're seeing the traditional upswing in tax trickery," said IRS Acting Commissioner Bob Wenzel. "Year after year, con artists across the nation try pulling a fast one on honest taxpayers with different types of miracle tax solutions. Don't be fooled by the 'Dirty Dozen' and other misleading scams. There is no secret way to get out of paying taxes."
Taxpayers who suspect tax fraud can report it to the IRS at 1-800-829-0433. More information on tax scams and schemes is available by visiting "The Newsroom" section of irs.gov .
The IRS urges people to avoid these common schemes:
Sign up to receive free daily business updates by email every weekday afternoon.
Use Search Watch to watch for related topics, companies.
Receive free Industry News via email. Choose from 46 different industries.
1. Offshore Transactions-- Use of an offshore credit card, trust or other arrangement to hide or underreport income or to claim false deductions on a federal tax return is illegal.
2. Identity theft.
3. Phony Tax Payment Checks.
4. African-Americans Get a Special Tax Refund -- African-Americans have been misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law.
5. No Taxes Withheld From Wages -- Illegal schemes are being promoted that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees. These schemes are based on an incorrect interpretation of tax law and have been refuted in court.
6. Improper Home-based Business -- This scheme purports to offer tax "relief" but in reality is illegal tax avoidance. The promoters of this scheme claim that individual taxpayers can deduct most, or all, of their personal expenses as business expenses by setting up a bogus home-based business.
7. Pay the Tax, Get a Prize -- The caller says you've won a prize, and all you have to do to get it is to pay the income tax due. Don't believe it. Someone who really wins a prize may need to make an estimated tax payment to cover the taxes that will be due at the end of the year. But the payment goes to the IRS -- not the caller.
8. Frivolous Arguments -- False arguments that are unsupported by law. When a scheme promoter says "I don't pay taxes - why should you" or urges you to "untax yourself for $49.95," beware.
9. Social Security Tax Scheme -- Taxpayers shouldn't fall victim to a scam offering refunds of the Social Security taxes they have paid during their lifetimes. The scam works by the victim paying a "paperwork" fee of $100, plus a percentage of any refund received, to file a refund claim with the IRS. This hoax fleeces the victims for the up-front fee. The law does not allow such a refund of Social Security taxes paid.
10. "I Can Get You a Big Refund ... For a Fee!" -- Refund scheme operators may approach someone wanting to "borrow" their Social Security number or give him or her a phony W-2 so it appears that the person qualifies for a big refund. They may promise to split the refund with that person, but the IRS catches most of these false refund claims before they go out. And when one does go out, the participant usually ends up paying back the refund along with stiff penalties and interest.
11. Share/Borrow Earned Income Tax Credit-- Tax preparers illegally "share" one client's qualifying children with another client in order to allow both clients to claim the Earned Income Tax Credit.
12. Fake IRS agent comes to a taxpayers home to collect taxes due -- The IRS warns taxpayers that IRS special agents, field auditors and collection officers carry picture IDs and will normally try to contact you before they visit. If you think the person on your doorstep is an impostor, lock your door and call the local police.
For more information on the Internal Revenue Service, visit its Web site at irs.gov .
© 2003 American City Business Journals Inc. |
