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7 Tax Evasion Scams to Beware Of

The Dirty Dozen is a list that is published by the Internal Revenue Service of the most common tax frauds that take place in a given year. Although these scams can happen at any time of the year, they all tend to peak around filing season. It is important to be aware of these tax scams as they can put you in very hot water. Here we have listed the 7 most common of these scams to ensure that you avoid falling for these tax scams in order to stay clear of tax fraud.

1.آ  Telephone Scams

The IRS has recently reported that there has been a substantial increase in the number of telephone scams that have been occurring recently. Many of these scams will target specific communities. Telephone scams usually involve a caller who will represent himself as being a part of the IRS, and will often give a fake badge number and name. Some telephone scam artist will even take it so far as using a fake toll-free number that is similar to the IRSق€™s actual number so that when people look at their caller ID, it seems as though the call is legitimately from the IRS.

2.آ  Phishing

In this type of tax scam, a victim will get an email from what seems like the Internal Revenue Service. The email will ask that they open up an IRS website, however this website is fake, and is set up to get peopleق€™s personal information. Once the scam artist captures the information they will use it in order to commit fraud or other very serious crimes under the victimsق€™ names. They may also ask for financial information and be able to funnel peopleق€™s funds out of their bank accounts or use their credit cards.

3.آ  Fake Promises of Free Money

This fraud is typically targeted at low-income families, non-English speakers and the elderly. It usually occurs when a con artist poses as a tax preparer and promises huge tax refunds. They will provide advice based on inaccurate facts and then prepare a return that they claim theyق€™ll file for the victims. However, this will just be a huge scam to get money from the victim through the use of a substantial fee. By the time that the victim discovers the scam, typically through an IRS notice of an unpaid tax return, the scam artist will be nowhere to be found.

4.آ Fraud From a Return Preparerآ

This scam is similar to the previous one except for the fact that the tax preparers are actually legitimate. They are just very unethical. These tax preparers typically target those who are vulnerable, similar to the previous example. They will get a hold of the victimق€™s personal information and utilize it in order to commit refund fraud. Some will even go as far as committing identity theft.

5.آ  Fake Charitable Organizations

It is often the case that after a natural disaster, scam artists will take advantage of the situation by representing themselves as coming from a real charity in order to take advantage of people who want to help the situation. They may contact victims through email or telephone, and will make the promise that any donation made will be tax deductible. Even worse, in some instances the actual victims of the disaster will be contacted in order to try to take advantage of their vulnerability. These scam artist will imply that they are apart of the IRS and are reaching out in order to aid helpless victims, however they are just hoping to commit tax fraud or steal their identities.

6.آ  Using Frivolous Arguments

Although this isnق€™t exactly a scam in the traditional sense due to the fact there isnق€™t an actual beneficiary, if someone does try to avoid paying their taxes through claiming that an income tax is unconstitutional, or another ridiculous argument, then they themselves can easily become a victim. This is due to the fact that any tax payer who attempts to not pay their taxes by taking a radical stance will not be regarded very kindly by the IRS. There are a variety of penalties that may fall on those who try to deny that they need to pay taxes. This even includes going through criminal prosecution, and in some instance serving jail time.

Tax Structures That Are Abusiveآ

This type of tax scam is extremely complex and is usually done in order to benefit those taxpayers who are in a very high tax bracket. This takes place through the use of limited liability partnerships and companies, as well as international companies or other such business structures that are non-traditional. These scammers will create their own business structure in order to attempt to appear like an entity that is tax neutral. Those that are unsuspecting will be asked to buy into the business with the promise that it will substantially reduce or even eliminate their tax liability.