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Presenting the IRS Dirty Dozen Tax Scams for 2015: Part 1

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Feb 6th 2015
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Each year the IRS publishes a detailed list of the “Dirty Dozen tax scams” plaguing taxpayers. For 2015, it decided to go one step further, issuing an individual press release covering a tax scam each day for 12 consecutive business days, starting on January 22. Here’s a rundown on the scams covered by the IRS in the first week—the rest will come shortly.

1.Phone scams (IR-2015-05, 2/22/15): Use of aggressive and threatening phone calls by criminals impersonating IRS agents is still near the top of the list. The IRS has seen a surge of these phone scams in recent months as scam artists threaten victims with police arrest, deportation, license revocation, and other actions. Taxpayers are reminded to guard against such con games arising during tax filing season.

Typically, scammers alter caller ID numbers to make it look like the IRS is calling. They use fake names and bogus IRS badge numbers and often leave "urgent" callback requests, preying on the most vulnerable people, like the elderly, new immigrants, and those whose first language is not English. The IRS recently posted a new YouTube video warning to taxpayers not to be fooled by imposters posing as agency representatives.

2. Phishing (IR-2015-6, 2/23/15): Phishing is a scam frequently carried out with the help of unsolicited email or a fake website that lures in potential victims and prompts them to provide valuable personal and financial data. Armed with this information, a criminal can commit identity theft or financial theft.

If taxpayers receive an unsolicited email appearing to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), the IRS advises them to report it by sending it to [email protected]. It is important for taxpayers to remember that the IRS generally doesn’t initiate contact with taxpayers through an email requesting personal or financial information.

3. Identity theft (IR-2015-07, 2/26/15): Tax-related ID theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. Although the IRS has recently made significant strides—over a three-year period ending in 2014, it halted 19 million suspicious returns and protected over $63 billion in fraudulent refunds—this remains a prime concern.

For 2015, the IRS will continue to increase both the number and efficiency of the identity theft data models and filters used to identify potentially fraudulent returns. Furthermore,  the IRS continues to expand its partnerships with financial institutions to identity and stop fraudulent refunds.

4. Tax return preparer fraud (IR-2015-08, 1/27/15): The vast majority of tax professionals provide honest high-quality service. But some dishonest preparers set up shop each filing season to perpetrate refund fraud, identity theft, and other scams that hurt taxpayers. That's why unscrupulous preparers who prey on unsuspecting taxpayers with outlandish promises of overly large refunds make the Dirty Dozen list every year.

Taxpayers must choose carefully when hiring an individual or firm to prepare a return. Unscrupulous preparers often mislead well-intentioned taxpayers into taking unsubstantiated credits or deductions just so they can increase their fees. These tax preparers face everything from penalties to even jail time for defrauding clients.

5. Unreported offshore accounts (IR-2015-09, 1/28/15): Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts, or nominee entities and then using debit cards, credit cards, or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities, or insurance plans for the same purpose.

The IRS uses information gained from investigations to pursue taxpayers with undeclared accounts as well as the banks and bankers suspected of helping clients hide their assets overseas. Since 2009, tens of thousands of individuals have voluntarily provided information about their foreign financial accounts, taking advantage of special opportunities under the Offshore Voluntary Disclosure Program (OVDP). The OVDP, reinstated in 2012, will remain open indefinitely.

6. Inflated refund claims (IR-2015-12, 1/29/15): Scam artists routinely pose as tax preparers during tax return season, luring victims in by promising large federal tax refunds or refunds that people never dreamed they were due in the first place. They  use flyers, advertisements, phony storefronts, and even word of mouth to cast a wide net for victims. The offers may even be spread through community groups or churches where trust is high.

These crooks build false hope by duping people into making claims for fictitious rebates, benefits or tax credits. They charge good money for very bad advice. Even worse, they may file a false return in a person's name and that person never knows that a refund was paid. The IRS has published a list of tips and other resources to help taxpayers select a qualified tax professional.

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