CompanyBusinessNewsCritic - The US Internal Revenue Service has published their yearly ranking of tax scams, called Dirty Dozen, in an effort to remind taxpayers to be cautious as there are many schemes designed to cheat them this tax period.
The list which is compiled by the IRS every year also contains a wide range of common tax scams that people can encounter anytime. But the fraudulent claims usually increase during the time people file their tax returns. Con artists will try to cheat people either through online, email messages, flyers, word of mouth or personal encounter. They are armed with misleading promises about free money or lost refunds.
The most complex and accounts for the most number of victims is the case of identity theft. IRS has seen increasing number of such cases where the thieves use legitimate taxpayers' information to file a return and claim a fraudulent refund. A notice from the IRS will usually be sent to a taxpayer if more than one return was filed in his or her name, or if he or she received salary from an unknown employer.
Suspicious preparers of return have been known to steal their clients' refunds or charge huge amounts for preparing the return on the client's behalf. They basically draw potential clients by promising guaranteed or increased refunds. A number of federal courts have already issued hundreds of injunctions while the Justice Department has many pending complaints against others.
Because of this, taxpayers are warned to choose carefully who to hire as tax preparer. As a preventive measure, every paid preparer are required to have a PTIN (Preparer Tax Identification Number) that he needs to put on the returns he prepares.
Scammers typically target the elderly and persons who have low income in order to bring false hopes and charge them for the 'advice'. But victims always end up disappointed afterwards.
For instance, several years ago, one of the most widespread tax frauds toyed with the concept that paying tax is not required at all but only voluntary. Furthermore, victims were told that if you put a specific language on your tax return, IRS would not tax you. But as part of the whole scam, you have to pay some amount or other to get the language and the proper forms.
The primary source of identity theft was discovered to be in hospitals where patient information is not secured properly.
IRS announced last month a national crack down on suspected perpetrators of tax fraud as part of their efforts to protect taxpayers. Together with the Department of Justice's Tax Division, they have created a protection unit and a hotline dedicated for fraud issues to assist taxpayers.
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