Common Tax Scams for 2011

Each year the Internal Revenue Service issues a list of the top tax scams. They call their list the “Dirty Dozen Tax Scams”. While all of them are not applicable to the vast majority of taxpayers, here are some of the most common that are:

Scams Point Identity Theft and Phishing. Thieves pose as employees of the IRS and attempt to steal your identity. This is often done over the phone or via official looking emails. Please remember the IRS never institutes contact via emails and never give personal information over the phone or via email.
Scams Point Filing False Returns for Refunds. The biggest culprits continue to be improperly claiming dependents or filing invalid claims for the Earned Income Credit and Child Tax Credits.
Scams Point Improperly Replacing Informational Returns. In this scenario, correct W-2s and 1099s are replaced with incorrect “corrected returns”. The new “corrected” returns report lower income amounts that are then used by the IRS to match against the filed tax return. This lower income allows the filer to lower their tax obligation.
Scams Point Abuse of Charitable Organizations and Donations. This includes attempts by donors to shield assets from tax by improperly controlling personal investments inside a charitable organization or by improperly sheltering income within a charity to avoid paying personal income tax.
Scams Point Hiding Income Offshore. Promoters of this scam solicit clients by advertising ways to move income out of the United States with the sole purpose of avoiding tax, often by hiding assets in offshore accounts.
Scams Point Nontaxable Social Security with Exaggerated Withholding Credit. By overstating withholdings and misreporting the “taxable” portion of Social Security taxpayers in this group look to avoid paying tax on Social Security benefits.
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