Beware the 2016 Dirty Dozen tax scams

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By Bankrate


It’s not just the Internal Revenue Service that’s trying to get hold of your money. Crooks also are out in force during tax filing season.

These unofficial would-be collectors of your tax dollars are con artists, who over the years have come up with a variety of schemes, some quite sophisticated, to separate you from your cash.

Few new, but persistent ploys

The IRS issues an annual list of the top 12 tax scams. Most of this year’s Dirty Dozen are repeats of schemes the IRS warned about last year, ranging from the continuing threat of tax identity theft to phone scams to phishing.

Heck, the IRS says that sometimes we can’t trust apparent charitable groups or even our own tax pros!

The latest scams that the IRS is watching and wants us to keep an eye on, too, are:

  1. Identity theft
  2. Phone scams
  3. Phishing
  4. Return preparer fraud
  5. Offshore accounts
  6. Inflated refund claims
  7. Fake charities
  8. Falsely padding deductions
  9. Excessive business credit claims
  10. Falsifying income to claim tax credits
  11. Abusive tax shelters
  12. Frivolous tax arguments

Increased efforts to fight ID theft

When it comes to the top tax scam, the IRS points to Security Summit measures implemented this year to make it harder for crooks to steal taxpayer identities and refunds.

The IRS has added more filters to screen suspicious federal returns. Other Security Summit participants, which include state tax departments and the tax software industry, also have beefed up their defenses against fake return files, such as asking for taxpayer driver’s license numbers to help verify that filings are legitimate.

And, says IRS Commissioner John Koskinen, taxpayers must take preventative steps, too.

“We urge people to use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms,” Koskinen said. “Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary.”

If you do find that crooks have your personal or tax information, you can monitor your credit with free tools from myBankrate.

Year-round criminal tax activity

Most of the tax scams peak during filing season. However, tax crooks operate year round.

And schemes that appear to save filers some tax dollars can actually end up costing even more. Once the scam is revealed, victims will owe not only their tax bills, but also penalties and interest.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

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