Tax Tips: Five Tax Scams to Avoid

1. Phishing Phishing — A tactic used by scam artists to trick unsuspecting victims into revealing personal or financial information in an electronic communication ā€“ will mislead consumers by telling them they are entitled to a tax refund from the IRS and encourage them to reveal personal information to claim it. Any email you receive that you suspect is a phishing attempt, or directs you to an imitation IRS website, should be forwarded to the IRS.

2. Return Preparer Fraud — Dishonest tax return preparers may skim a portion of their clientsā€™ refund, charge inflated fees, or promise a refund that is too good to be true. The IRS now requires all paid return preparers to register with the IRS, pass a competency test, and continue their education.

3. Hiding Income Offshore — Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts. IRS agents continue to develop their investigations of these offshore tax avoidance transactions.

4. Abuse of Charitable Organizations and Deductions — The IRS continues to observe the misuse of tax-exempt organizations including arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets, and schemes where donations are highly overvalued.

5. Frivolous Arguments — If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on IRS.gov. These arguments have been thrown out of court. Please give me a call for clarification regarding the above tax scams or any other tax-related issues. Happy to help!