The IRS completed its yearly campaign to highlight tax scams
The IRS identified its 2018 “Dirty Dozen” list of tax scams on March 21 with an announcement (IR-2018-66) summarizing the campaign’s initiatives.
The Dirty Dozen list highlights a wide variety of schemes and scams that taxpayers may encounter throughout the year, but which often peak during tax-filing season. The topics covered by the campaign range from simple fraud and phishing attempts to complex tax avoidance schemes such as abusive tax shelters and offshore tax avoidance. Each topic was separately announced and discussed throughout the campaign.
- Phishing: Potential fake emails or websites attempting to steal personal information. The IRS will never initiate contact with taxpayers via email, nor should a taxpayer click on a link in an email purportedly sent by the IRS. (IR-2018-39)
- Phone Scams: Phone calls made by criminals impersonating IRS agents continue as a threat to taxpayers. Criminals threaten taxpayers with arrest, deportation and license revocation, among other things, to motivate taxpayers to provide personal information or make payments to the criminal. (IR-2018-40)
- Identity Theft: Taxpayers should be alert to tactics aimed at stealing their personal information so that criminals can impersonate the taxpayer. Taxpayers should be alert to the scam throughout the year. (IR-2018-42)
- Return Preparer Fraud: While the vast majority of return preparers provide high-quality service, unscrupulous return preparers operate each filing season to scam clients and perpetuate refund fraud, identity theft and other scams to hurt taxpayers. (IR-2018-45)
- Fake Charities: Illegitimate charities, often masquerading with names similar to nationally-known organizations, solicit donations from unsuspecting contributors. (IR-2018-47)
- Inflated Refund Claims: Taxpayers should be skeptical of preparers who promise inflated tax refunds. These preparers often ask taxpayers to sign a blank return, promise a big refund before looking at a taxpayer’s records or charge fees based on a percentage of the refund. (IR-2018-48)
- Excessive Claims for Business Credits: Taxpayers should avoid improperly claiming the fuel tax credit and research credit. The fuel credit is usually limited to off-highway use. Improper research credit claims often fail to substantiate the qualified research activities or claim expenses without a nexus to research activities. (IR-2018-49)
- Falsely Padding Deductions on Returns: Taxpayers should avoid falsely inflating deductions or expenses on their returns to overstate deductions and pay less tax than is owed or receive a larger refund than is appropriate. (IR-2018-54)
- Falsifying Income to Claim Credits: Scammers may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. These scams can lead to taxpayers facing large bills to pay back taxes, interest and penalties. (IR-2018-55)
- Frivolous Tax Arguments: Promoters of frivolous schemes encourage taxpayers to make unreasonable claims about the legality of paying taxes despite such claims’ repeated failures in court proceedings. Filing a frivolous return may result in a $5,000 penalty. (IR-2018-58)
- Abusive Tax Shelters: Abusive tax structures are sometimes used to avoid paying taxes, and the IRS is committed to stopping these complex tax avoidance schemes. When in doubt, taxpayers should seek an independent opinion of any complex tax product they are offered. (IR-2018-62)
- Offshore tax avoidance: Some taxpayers attempt to hide money and income offshore, but the IRS has addressed offshore tax avoidance in recent years with success. Taxpayers have several avenues to voluntarily disclose offshore income, assets and money. (IR-2018-64)
RSM professionals take their responsibility to protect their client’s information seriously and are available to help clients avoid these scams and schemes, and, if needed, help clients resolve any tax issues caused by them.