Tax scams hitting hard this season, IRS warns

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There are new tax-related scams hitting hard this season, as well as a warning about some tax preparers. (WLS)

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The deadline to file your taxes is less than a month away, but there are various tax-related scams on the rise that could cost you thousands of dollars.

Most of us know about the IRS phone scam where fake IRS agents trick people into wiring thousands of dollars. But there are other new, tax-related scams hitting hard this season, as well as a warning about some tax preparers.

It's tax time - and the IRS says it's also the season for scammers. Experts say you need to be on guard for strangers who may use your social security number to file a fake tax return - or even questionable "tax preparers" cooking the books for themselves.

"Every year we find a nest, a group of people who decide to take advantage of their client the tax payers, and file false claims in their name we just recently indicted an individual (jump to ) they were filing false claims in the names of the tax payers and depositing the refunds," said IRS Criminal Investigation Special Agent James Robnett.

There are also new concerns about phishing, deceiving emails which look like they are from the IRS.

"And they're designed so that you open up an attachment and it obtains your personal information off your computer," Robnett said.

But the IRS will never initiate contact with taxpayers via email or phone about money owed.

And then there are scams which specifically target people who owe back taxes.

"They're saying they can help you alleviate that debt that you owe, when in actuality they can't. They ask for an advance fee," said Steve Bernas, Better Business Bureau.

The Better Business Bureau says no one can completely erase your IRS debt.

The BBB and the city's Business Affairs and Consumer Protection Department are also warning people about unlicensed tax preparers who may not provide the proper legal disclosures - or others which may be long gone and unable to protect you after you file.

"The BBB is always concerned about those pop-up places that appear on the street corners or in the mall or the car dealership, because come April 17 this year, they may not be around," Bernas said.

"And you want to make sure that you don't go to a tax preparer who says they can get you the largest refund, or that their fee is based on a percentage of the refund," Robnett said.

Before you use a tax preparer or accountant, you should make sure they are licensed. The IRS has also released what calls its "dirty dozen" warnings about U.S. tax scams and questionable refund claims.

BACP Consumer Bill of Rights Tax Preparer

Find a Free Tax Preparer. The City of Chicago has partnered with the Center for Economic Progress and Ladder Up to support eligible families and individuals who cannot afford professional tax preparation services. Visit www.taxprepchicago.org to find the nearest free tax preparation site.
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From IRS:

IRS Summarizes "Dirty Dozen" List of Tax Scams for 2017

IR-2017-37, Feb. 17, 2017 Español

WASHINGTON - The Internal Revenue Service today announced the conclusion of its annual "Dirty Dozen" list of tax scams. The annual list highlights various schemes that taxpayers may encounter throughout the year, many of which peak during tax-filing season. Taxpayers need to guard against ploys to steal their personal information, scam them out of money or talk them into engaging in questionable behavior with their taxes.

"We continue to work hard to protect taxpayers from identity theft and other scams," said IRS Commissioner John Koskinen. "Taxpayers can and should stay alert to new schemes which seem to constantly evolve. We urge them to do all they can to avoid these pitfalls - whether old or new."

This is the third year the IRS has highlighted its Dirty Dozen list in separate releases over 12 business days. Taxpayers are encouraged to review the list in a special section on IRS.gov and be on the lookout for these con games.

Perpetrators of illegal schemes can face significant fines and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them. Taxpayers should keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else. Be sure the preparer is up to the task. For more see the Choosing a Tax Professional page.

Here is a recap of this year's "Dirty Dozen" scams:

1. Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don't click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2017-15)

2. Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2017-19)

3. Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else's Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized. (IR-2017-22)

4. Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2017-23)

5. Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2017-25)

6. Inflated Refund Claims: Taxpayers should be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims. (IR-2017-26)

7. Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses. (IR-2017-27)

8. Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. (IR-2017-28)

9. Falsifying Income to Claim Credits: Don't invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. Taxpayers should file the most accurate return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution. (IR-2017-29)

10. Abusive Tax Shelters: Don't use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2017-31)

11. Frivolous Tax Arguments: Don't use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2017-33)

12. Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it's a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program to enable people to catch up on their filing and tax obligations. (IR-2017-35)
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