Every year, the IRS issues alerts about a variety of common tax tricks and swindles (collectively referred to as “scams”) that it has seen, in an attempt to warn taxpayers about the threats. The IRS focuses on 12 such scams every year, which it calls its “Dirty Dozen,” and has recently announced the 2015 list. Many have appeared before. This article discusses some of them, in an effort to prevent our clients and readers from falling prey to them.

 Phone Scams Continue To Be Serious Threats

Aggressive and threatening telephone calls by criminals impersonating IRS agents remain an ongoing threat to taxpayers. The Service reports a  surge of these phone scams recently, as the scam artists threaten arrest, deportation, license  revoca- tion and other consequences.

Scammers are so devious that they are able to alter caller ID numbers to make it appear that the  IRS is calling. They use fake names and false IRS badge numbers, and may leave “urgent” callback  requests. The calls often demand that payments be made using prepaid debit cards, or they try to  lure you in by telling you that you are entitled to a refund. They target the most vulnerable among  us, such as the elderly, newly arrived immigrants and those whose first language is not English.

“These criminals try to scare and shock you into providing personal financial information on the  spot while you are off guard,” explains IRS Commissioner John Koskinen. “Don’t be taken in and  don’t engage these people over the phone,” he advises.

The first clue that the caller is a scammer is the fact of the call itself. The IRS will never  use a telephone call to demand immediate payment, nor will it call about taxes owed without having  first mailed a bill. The IRS will not require that a taxpayer use a specific payment method, such  as a prepaid debit card, or ask for credit card or debit card numbers over the phone. The IRS also  won’t threaten to have you arrested by local police.

The IRS advises that if you receive a telephone call from someone claiming to be from the IRS and  demanding money, and if you know that you don’t owe taxes or have no reason to believe that you do, report the incident to the IRS’s Treasury Inspector  General for Tax Administration at 1-800-366-4484  or  at http://www.tigta.gov. You may also wish to contact the Federal Trade Commission and use its “FTC  Complaint Assistant” at http://www.ftc.gov.

These criminals try to scare and shock you into providing personal financial information on the  spot while you are off guard… Don’t be taken in.

If you think you might owe taxes, a legitimate IRS employee at 1-800-829-1040 should be able to  help.

Phishing

Taxpayers also need to be on their guard against bogus emails or websites purporting to be from the  IRS seeking personal information. The first communication from the IRS will never be an email.  Don’t click on one claiming to be from the IRS that takes you by surprise, regardless of how official-looking and authentic it may appear.

Fake Charities

Unscrupulous groups masquerading as charitable organizations seek to attract donations from  unsuspecting contributors. Some use names or websites that sound or look like those of respected  legitimate organizations. There are many sources you can use to check whether a charity is bona  fide, such as the IRS’s own Exempt Organizations Select Check Tool, GuideStar, Charity Navigator or  the Better Business Bureau.

We have all received telephone solicitations from charitable organizations, often using the  services of paid telemarketing services. My policy when responding to such calls is to request that  an envelope be sent to me, so that I can mail my own check to the charity. I do not provide credit  card information to a charity that has contacted me, although I may do so if I have initiated the  call to the charity (such as during a pledge drive or a telethon).

The Remaining Dirty Nine

The remaining scams highlighted this year by IRS are:

  1. identity theft (see the Summer 2013 issue of Estate Planning & Tax Advisor for how this happens  and what to do);
  2. return preparer fraud by unscrupulous return preparers, some setting up their offices only  during tax season, misrepresenting their qualifications and often practicing identity theft;
  3. offshore tax avoidance by hiding assets and income offshore;
  4. tax preparers promising to obtain inflated refunds;
  5. concealing taxable income by filing false Forms 1099s or other documents;
  6. use of abusive tax shelters;
  7. falsifying income to erroneously claim tax credits;
  8. improper claims for fuel tax credits (generally limited to off- highway business use, such as farming, and so not available to most taxpayers); and
  9. using frivolous tax arguments, encouraged by promoters of various schemes so that taxpayers make unreasonable and various schemes so that taxpayers mak outlandish claims to avoid paying taxes.