IRS Spokeswoman: Tax Season Spawns Identity Theft
Tax season is a ripe time for the unscrupulous to take advantage of those filing their returns, an Internal Revenue Service spokeswoman says.
Scammers use a variety of ways to get someone's identity, sometimes by calling a person and telling them their tax returns indicate they owe money and need to pay up immediately or risk arrest and imprisonment, Karen Connelly said.
Sometimes they will ask for personal information -- Social Security number, bank account numbers, credit card numbers and the like -- in the process and do other damage as well, Connelly said.
"People can take that information wherever they get your identity," she said. "They can open accounts in your name, clean out your bank account. They can do all kinds of damage much beyond the impact of the tax return."
Identity theft may not have the drama of robbery, but the financial pain can be greater, Connelly said.
"This type of crime hits people generally pretty hard because they're not stealing in small increments," she said. "They're going to take you for a bit of money, it's going to be a large bit, and we're talking about thousands at a time."
To fight these crimes, the IRS recently identified its "dirty dozen" top scams of the year that often start during tax season. More details can be found on its website.
Some of these are deceptive and illegal acts committed by criminals preying on taxpayers.
And some scams are committed by taxpayers themselves, who enrich themselves at other taxpayers' expense.
Here they are:
Identity Theft: Criminals file fraudulent tax returns using other taxpayers' Social Security numbers.
Phone Scams: Criminals impersonating IRS agents call people, tell them they owe money and threaten them with arrest and penalties if they don't pay.
Phishing: Criminals will send fake emails or advertise bogus websites looking to steal personal information. Don’t click on one claiming to be from the IRS.
Return Preparer Fraud: Most tax professionals provide honest high-quality service, but some dishonest preparers set up shop to perpetrate refund fraud and identity theft.
Offshore Tax Avoidance: Don't conceal assets in unreported offshore accounts to avoid taxes is illegal.
Inflated Refund Claims: Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records, or charges fees based on a percentage of the refund.
Fake Charities: Watch out for groups masquerading as charitable organizations to attract donations, and be wary of charities with names similar to familiar organizations.
Falsely Padding Deductions on Returns: Do not falsely inflate deductions or expenses on returns to under pay what they owe or possibly receive larger refunds.
Excessive Claims for Business Credits: Don't improperly claim the fuel tax credit, which is generally limited to off-highway business use including farming. Likewise, don't misuse of the credit for research activities.
Falsifying Income to Claim Credits: Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by scam artists, which can lead to big bills to pay back taxes, interest and penalties, if not criminal charges.
Abusive Tax Shelters: Don’t use abusive tax structures to avoid paying taxes.
Frivolous Tax Arguments: Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they are wrong and have been repeatedly thrown out of court.