Top Tax Scams, Part 1

Just in time for tax season, CNN/Money has a list of the top twelve tax scams. Included here are four cons to be on the lookout out for. The balance of the so-called “dirty dozen” (which are coming soon to a blog post near you) focus on common cheating schemes that filers try to get away with.

Phishing: To start with, identity thieves have started to pose as the IRS or financial institutions in an effort to “phish” personal information such as Social Security and credit card numbers from consumers. Never hand over sensitive information, the IRS warns, noting that it doesn’t contact taxpayers via e-mail regarding questions with their accounts.

Zero return: Taxpayers should also be aware of individuals offering tax-saving packages for a fee, according to the IRS. One particular scam involves promoters telling unsuspecting taxpayers that they can enter zero income on their federal income tax form and write “nunc pro tunc,” a Latin phrase meaning “now for then,” and that the IRS will disregard their original return that included wages and other income. In other instances, individual taxpayers have hatched similar schemes thinking they can lighten their yearly tax bill.

Return preparer fraud: If you do opt for someone to do your taxes, be wary of those tax preparers who promise large refunds. Those individuals may be charging you higher fees and skimming from your tax return. In the eyes of the IRS, the taxpayer ultimately bears the responsibility of making sure their tax return is accurate.

Credit counseling agencies: Besides keeping a close eye on the person who prepares your taxes, the IRS says that taxpayers should also be careful with credit counseling agencies, who may promise to provide financial guidance. Instead, individuals looking for help could find themselves saddled with even more debt and financial headaches.

My thoughts: Back in December I ran across a very convincing IRS phishing e-mail… I’d imagine that these will become more and more common as we get closer to April. As far as the other points go, if it sounds to good to be true, then it probably is… And keep in mind that credit counseling and repair scams are becoming more and more common.

See also: Top Tax Scams, Part 2 and Top Tax Scams, Part 3.

[Source: CNN/Money]