It’s tax season again, and that means scrambling to pull together your documents and praying for that large refund. Unfortunately, it’s also a time of year when unscrupulous individuals come out of the woodwork looking to victimize innocent people.
Not only can scammers cost taxpayers thousands of dollars, but they can actually end up with the victim facing criminal prosecution if you listen to the wrong advice. Read an overview of the most common kinds of tax scams, as well as some advice to avoid getting yourself into trouble with the government this season.
Things to Remember to Avoid Tax Scams
There are three things that the IRS wants people to remember when it comes to falling victim to tax scams:
- You are responsible for all content on your tax return and liable for any inconsistencies or errors that occur.
- Beware of anyone who promises large refunds without even looking at your tax documents.
- Never sign any paperwork you haven’t carefully reviewed for accuracy.
By keeping these things in mind, you can help to avoid a number of common illegal tax schemes.
Potentially the most common form of fraud to which taxpayers fall victim, the dishonest tax preparer is out to line their own pockets by using inflated fees and skimming of refunds. The problem gets worse, however, in that these fraudulent preparers will promise large refunds and may often falsify information to get more money so as to collect more.
When looking for a tax preparation professional, go with a reputable company and beware of offers that sound too good to be true—they probably are!
Identity Theft Schemes
Identity theft is another major problem in today’s high-tech society. Tax documents require disclosure of potentially damaging information, and thieves have used this information to clone or create phony credit cards, apply for loans, open mobile device accounts, access bank funds and more. Be very careful about to whom you reveal personal information, and know that the IRS does not use e-mail to contact taxpayers. If you get a communication from the IRS, you’re within your rights to call them back to confirm.
Outlandish Arguments and Claims
Some scammers will make outrageous claims to support their illegal activities. Among the more common include:
- The Sixteenth Amendment which enables the government to collect income tax is illegal and was never ratified;
- Wages don’t count as taxable income;
- Paying taxes is actually voluntary;
- You can avoid filing a 1040 by pleading the Fourth or Fifth Amendments.
Be very clear: these and similar arguments are patently false. They have been tried and thrown out of court. While you can contest your tax liabilities in court, you can’t simply refuse to file or pay for that is illegal and could land you in a great deal of trouble.
This tax season, if you have any concerns about fraud or want more information about your taxes and tax laws this year, please contact me, Amy Van Fossen, at 201-806-3364.