The dirty dozen tax scams: Part 1

You need to know the top tax scams of 2015.

Tax time will be here soon but it won’t arrive alone. Tax scams will be arriving too. Taxpayers should be aware of the fraudulent activity that revolves around tax preparation and filing.

The Internal Revenue Service (IRS) has classified twelve scams as the “dirty dozen” for 2015. This is the first of two articles that will explain schemes that are perpetrated on or by tax payers. Here are the first six:

  • Phone scams: Con artists pretend to be legitimate representatives of the IRS. They threaten victims with deportation, arrest, or other devastating consequences to extort money and personal information.
  • Phishing:  Victims receive emails or are directed to websites that look authentic and seem to be from the IRS, but are not. This is a ploy to gain personal information.
  • Identity theft: The victim’s social security number is stolen and used to file a fraudulent tax return. The victim usually discovers this crime when attempting to file their own taxes. They are told the return has been previously filed.
  • Return preparer fraud: Some tax preparers are criminals and steal personal information from their customers. These preparers will also victimize their customers with refund fraud, expensive preparation fees, and other scams. 
  • Offshore tax avoidance: Dishonest taxpayers attempt to hide profits and income in offshore accounts in order to avoid paying taxes. 
  • Inflated refund claims: A tax preparer has no knowledge of a taxpayer’s current financial situation. The preparer has not reviewed any of the customer’s records or documents but promises a large refund. The preparer may suggest that the taxpayer sign a blank tax return. The tax preparation fee will be exorbitant because it is based on a percentage of the anticipated refund. 

The remaining six components of the “dirty dozen” will be explained in the second article of this two part series.

Michigan State University educators invite you to assess your financial health and visit Michigan State University Extension. In addition, Michigan State University offers money management and homeownership classes. For more information about classes offered in your area visit MI Money Health.    

Related Events

Related Articles

Related Resources