Watch Out For Tax Scams!

Filed Under Tax News, Tax Returns, Tax Scams

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In TAX TIP 2006-24 the IRS Warns Taxpayers To Beware of Tax Scams

Tax scams can take several forms, ranging from the promise of a large tax refund to the promotion of illegal ways of taxing yourself.

Believe me, a few extra dollars is absolutely not worth the pain of the IRS chasing after you for years on end!

Here are some of the common schemes you should beware of:

Return Preparer Fraud:
Dishonest tax return preparers can cause many headaches for taxpayers who fall victim to their schemes.

Basically these preparers get their financial gain by skimming a portion of your refunds and by charging you inflated fees for return preparation services.

They will try to attract you by promising large refunds which may be dubious.

Remember: No matter who prepares your tax return you are ultimately responsible for its accuracy and for any tax bill that may arise due to a questionable claim.

So choose carefully when you hire a tax preparer, because if what they are offereing sounds too good to be true, it probably is.

Identity Theft:
Take care when disclosing your personal information. The IRS is aware of several identity theft scams involving taxes or scammers posing as the IRS itself.

Identity thieves have posed as IRS employees and then used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans.

The IRS does not use e-mail to contact taxpayers about issues related to their accounts. If you have any doubt whether a contact from the IRS is authentic call 1-800-829-1040 to confirm it.

Frivolous Arguments:
Promoters of dubious tax schemes have been known to make various outlandish claims such as:

- the Sixteenth Amendment concerning congressional power to establish and collect income taxes was never ratified;

- that wages are not income;

- that filing a return and paying taxes are merely voluntary;

- and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy.

These are all mad and bad, so donâ€™t believe these or other similar claims. The arguments are false and have already been thrown out of court.

As a taxpayers you have the right to contest your tax liabilities in court but no one has the right to disobey the law and if you do - deliberately or otherwise - it will cost you dollars and pain.

Three important lessons to remember:

1. You are responsible and liable for the content of your tax return.

2. Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and

3. Never sign a tax return without looking it over to make sure it is accurate.

Click here for more information about tax scams and other useful tax tips from the IRS.

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