The IRS has released its annual compilation of the “Dirty Dozen” for 2018 highlighting the most common scams taxpayers will likely face as the tax season fast approaches.
In announcing the list for 2018 , the IRS highly encourages taxpayers to remain vigilant not only during tax season but throughout the year. The agency says the scams are getting more aggressive with evolving schemes from the simple to the sophisticated. There is a common theme running through the previous lists , with phone scams, phishing and identity theft showing up as the perennial favorites among scammers.
For small businesses, the threat environment is growing as they are now the target of 43 percent of cyber-attacks . And with more services, including taxes, being carried out digitally and online, it is extremely important to have robust security measures in place to protect the data of your business and that of your customers.
2018 Tax Scams – The “Dirty Dozen”
Phishing: Don’t open emails or click on links on a website if you are not sure where it comes from or where it is taking you (IR-2018-39 ).
Phone Scams: Callers impersonating IRS agents continue to be one of the biggest problems for taxpayers. These callers threaten taxpayers with police arrest, deportation and license revocation. The IRS doesn’t make overt threats like these (IR-2018-40 ).
Identity Theft: Monitor your social security number and other financial records to make sure your identity hasn’t been stolen. Identity thieves use personal information to file taxes and carry out other financial scams (IR-2018-42 ).
Return Preparer Fraud: If this is the first time you use a particular tax professional, follow up to ensure your identity hasn’t been used in refund fraud, identity theft and other scams. While most professionals are honest, the IRS says some are unscrupulous (IR-2018-45 ).
Fake Charities: If you are going to make donations as part of your tax filing, make sure the charity is legitimate. The IRS provides tools to check the status of charitable organizations (IR-2018-47 ).
Inflated Refund Claims: If you’re being promised an inflated tax refund, it might be too good to be true. Only use legitimate tax return professionals (IR-2018-48 ).
Excessive Claims for Business Credits: Don’t get talked into claiming unsupported credits for your business or you may face penalties. (IR-2018-49 )
Falsely Padding Deductions on Returns: Just as you should avoid improperly claiming tax credit, you should also avoid inflating deductions or expenses to pay less or receive larger refunds (IR-2018-54 ).
Falsifying Income to Claim Credits: If you haven’t earned the income don’t claim it for tax credits. The IRS warns taxpayers will face large bills to pay back taxes along with interest and penalties (IR-2018-55 ).
Frivolous Tax Arguments: The penalty for filing a frivolous tax return is $5,000, so don’t get talked into making outlandish arguments for not paying your taxes (IR-2018-58 ).
Abusive Tax Shelters: There are legitimate tax shelters, but there are also many that aren’t. The IRS recommends taxpayers consult independent opinion regarding any such offers (IR-2018-62 ).
Offshore Tax Avoidance: If you are avoiding your tax obligations with offshore schemes, the IRS reminds everyone it has a history of successful enforcement actions against offshore cheating. The agency says individuals and organizations guilty of breaking the law by not properly reporting offshore accounts are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities (IR-2018-64 ).
A Final Note
The IRS warns you are legally responsible for what is on your tax return even if it is prepared by somebody else. You can protect yourself by choosing a reputable tax preparer and by being proactive in monitoring your personal financial records throughout the year not just during tax season.
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