As Americans gather up all their forms and records to prepare for income tax season, they should also prepare to safeguard themselves against tax scams, online and elsewhere.
For example, the Internal Revenue Service issued a warning to taxpayers this month about a scam involving erroneous tax refunds. The scam involves stealing client data from tax professionals and using it to file fraudulent returns and having the funds deposited into the clients' real bank accounts. The scammers then get the money from the taxpayers by posing as debt collectors acting on behalf of the IRS or sending automated calls claiming to be from the IRS and providing information to return the refund.
That scam is a new version of an old trick, IRS official say. But it's just one of many hoaxes that confront taxpayers every year. And taxpayers themselves may use a variety of ways to falsely claim larger refunds or avoid paying taxes.
Here's a quick look at the top tricks to be aware of, that the IRS says are played on and by taxpayers:
-- Phishing involves fake emails or websites attempting to steal personal information. IRS officials warn taxpayers to be wary and never click on emails claiming to be from the IRS.
-- Phone scams come from thieves claiming to be IRS officials, who threaten taxpayers with arrest, criminal charges, deportation, license revocation, or other adverse action.
-- Identity theft at tax time most often involves criminals who file fraudulent returns using someone else's Social Security number. Taxpayers who file electronically may have their returns rejected because a return with their Social Security number has already been filed.
-- Tax preparer fraud involves dishonest preparers who use the tax filing season to commit refund fraud, identity theft and other scams.
-- Fake charities are groups posing as charitable organizations to get donations from unsuspecting contributors.
-- Inflated refund claims hold out the promise of larger tax refunds. Taxpayers should be wary of being asked to sign blank tax returns, promises of a large refund before their records have been reviewed, and preparers that charge fees based on a percentage of a refund.
-- Excessive claims for business credits can involve improperly claiming items such as fuel tax credit or research credits.
-- Falsely inflating deductions occurs when taxpayers claim larger deductions or expenses on their returns than they have incurred, or improperly claiming credits such as earned income credit or child tax credit, to pay lower taxes or get bigger refunds.
-- Falsifying income to claim credits happens when taxpayers — sometimes under pressure from scammers — claim income that will allow them to qualify for tax credits they are not entitled to, such as earned income credit or child tax credit.
-- Abusive tax shelters using tax structures to avoid paying taxes. This can be done by taxpayers, or by scammers who offer tax shelters that sound too good to be true.
-- Frivolous tax returns or arguments involve schemes by taxpayers or scammers to make unreasonable and outlandish claims such as claiming that taxpayers can refuse to pay for religious or moral reasons or that only federal employees are subject to federal income tax.
-- Offshore tax avoidance is attempting to hide income in offshore banks, brokerage accounts or nominee entities, or other methods such as foreign trusts, employee-leasing schemes, private annuities or insurance plans, to avoid paying tax on that income.
For more information on these and other tax alerts and details about how to protect yourself, check out the links to the IRS's security releases at https://go.usa.gov/xnec9.