Skip Links

IRS warns of Dirty Dozen 2012 tax scams

IRS list includes identity theft, phishing, other scams

By , Network World
February 17, 2012 02:01 PM ET

Network World - The Internal Revenue Service this week issued its annual "Dirty Dozen" ranking of tax scams the agency says tend to surface around tax season each year.

"Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen," said IRS Commissioner Doug Shulman in a statement. "Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don't be fooled by these scams."

MORE: 9 best practices for successful IT projects

Here's the Dirty Dozen list from the IRS:

Identity theft

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer's identity and personal information to file a tax return and claim a fraudulent refund.

In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

MORE: IRS: Top 10 things every taxpayer should know about identity theft

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer's name or that the taxpayer received wages from an unknown employer may be the first tip-off the individual receives that he or she has been victimized.

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information that can help you protect yourself from email scams.

Return preparer fraud

About 60% of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers. Questionable return preparers have been known to skim off their clients' refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

• Do not sign the return or place a Preparer Tax identification Number on it.

• Do not give you a copy of your tax return.

• Promise larger than normal tax refunds.

• Charge a percentage of the refund amount as preparation fee.

• Require you to split the refund to pay the preparation fee.

• Add forms to the return you have never filed before.

• Encourage you to place false information on your return, such as false income, expenses and/or credits.

Our Commenting Policies
Latest News
rssRss Feed
View more Latest News