The Dirty Dozen Tax Scams

Every year the IRS compiles a “Dirty Dozen” list of tax scams that taxpayers may encounter. It includes everything from fake charities to identity thieves calling to pretend they are IRS agents in order to dupe you out of personal financial information.

The one that tops the 2015 list is a warning to taxpayers to be on the lookout for unscrupulous tax practitioners who promise outlandish refunds.

According to a statement released by IRS Commissioner John Koskinen, "Every filing season, scam artists lure victims in by promising outlandish refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund."

As with all con artists, these scam artists will promise you vast financial gains, refunds that exceed your expectations. They may file false claims for education credits, solar energy credits, veteran’s benefits or low-income housing benefits, even Social Security benefits. And the real clincher will be that they will want a piece of these credits in addition to their fee. The IRS says, that it “…sometimes hears about scams from victims complaining about losing their federal benefits, such as Social Security benefits, certain veteran’s benefits or low-income housing benefits. The loss of benefits was the result of false claims being filed with the IRS that provided false income amounts.

If you know that you are not due these tax credits, run, don’t walk away. The IRS states, “Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.”

Sometimes you are entitled to a large refund. For example, if you are within the low to moderate income guidelines, that is if you earned $52,427 or less last year – you may qualify to receive the Earned Income Credit, especially if you have children. You may be entitled to receive up to $6,000. If you attended a bona fide college or university, you may be entitled to an education credit based on the tuition you paid to that institution.

However, if you suspect that you are not entitled to the refund being promised by your tax preparer, take your return elsewhere and have it reviewed.

Another way to determine if the person you are dealing with is a scam artist is that they will not provide you a copy of the return they filed on your behalf. And they will likely deposit the refund into their own bank account rather than yours. Bank account information is imprinted on the tax return at the bottom of page two of Form 1040. Examine that line carefully before signing. It would behoove you to deal only with a tax professional that is well-known in your community. After all, Koskinen adds, “The IRS reminds all taxpayers that they are legally responsible for what’s on their returns even if it was prepared by someone else. Taxpayers who buy into such schemes can end up being penalized for filing false claims or receiving fraudulent refunds.”

Taxpayers should take care when choosing an individual or firm to prepare their taxes. he IRS has a list of tips and other resources to help taxpayers select a qualified tax professional.