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Beware of the Dirty Dozen

Every year the IRS provides to the public with the Dirty Dozen tax scams that tax payers should be aware of to protect themselves from tax payer fraud. The tax filing season ends on April 17, and there are still some tax payers who will wait until the last minute to file their taxes. If you are one of those last minute tax filers, it’s important you are aware of the wide range of schemes ranging from identity theft to preparer fraud.  Here are just six of the Dirty Dozen tax schemes.

1.       Identity Theft – IRS says identity theft tops their list for tax schemes because of the growing cases throughout the US.  The IRS has put in place a comprehensive strategy for preventing, detecting and resolving identity theft.  IRS wants to warn taxpayers that identity thieves are constantly looking for ways to file fraudulent returns to get a tax refund.

2.       Phishing – Be on the lookout for disguised emails that resemble an IRS correspondence, encouraging tax payers to provide personal information.  The IRS will never contact tax payers through email, report all weird emails to phishing@irs.gov

.3.       Return Preparer Fraud – Beginning for the 2012 tax filing season, tax preparers who are not licensed CPA, EA or attorneys, have to apply for a PTIN to prepare taxes for the public.  All tax preparers must sign returns and provide their PTIN on all returns.

4.       “Free Money” from the IRS & Tax Scams Involving Social Security – Flyers have been distributed to community churches around the US, claiming that tax payers can file with little or no documentation.  These scams have been successful preying on low income or elderly individuals.

5.       False Form 1099 Refund Claims - Perpetrators create false 1099 tax forms to claim credit or deductions that are not allowed.  The IRS has warned individuals that if are party to these claims will be liable for financial penalties or even face criminal prosecution.

6.       Falsely Claiming Zero Wages - Filing false information returns such as W-2 or 1099 is an illegal way to reduce taxable income to zero.  Fraudsters will file tax form 4852 as a way to improperly support their false tax filings.  Individuals who take part in this scam may face a harsh penalty of $5,000.

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