How To Spot The 7 Most Common Income Tax Scams
If you have experienced being contacted by someone who claims to know the secret to reduce your taxes by a large percentage
? Or, have your ever received an email from the IRS asking for your social security number or credit card information?
If you say yes, youve probably had a close encounter or have been victimized by a tax scammer.
Here's some pointers on the 7 most common tax scams to help you become wiser and avoid becoming a victim.
Illegal IRS or Government Web Sites
Be sure you got the right government website. The official site of the Internal Revenue Service is http://www.irs.gov/. Be warned, there are untold thousands of fake sites out there, and all of them are after your precious identity.
Whats easy to spot are the amateur ones, but they can still cause a problem. While some other more sophisticated sites may be hard to tell apart from the real site because they use and update the site with actual content stolen from the real IRS Web site.
E-mail Solicitations
E-mail solicitation scams are in a similar category. An e-mail scam method of play is to try to get you to click on a link and trick you into giving your personal information to a bogus IRS site or another phishing site that will ask for personal information.
Some email solicitations may even have attachments which, if opened, can run a script which will give hackers a backdoor access to your personal information on your computer. Take note that the Internal Revenue Service does not start their contact with you by e-mail, so if you receive an e-mail that appears to be from the IRS, you can assume it's a scam and delete it outright.
If you really want to make sure, delete the file without opening it and call the IRS for a follow up.
Fake Online Tax Forms or Attachments
In a devious move, one complex tax scam uncovered by the IRS involved getting people to fill a tax form coming from what was claimed to be a legitimate organization representing the IRS.
The scam would complete once you fill the form for detailed personal financial information such as bank account numbers and credit card numbers, for the purpose of getting a discount tax deduction.
Just because this particular scam was uncovered doesn't mean that a similar one won't appear in your inbox or mailbox in the future, so be on the alert for any e-mail that requests person information.
Tax Dispute Scams
A reverse of the online tax scam is the is the attractive idea that you don't have to pay income taxes, because paying taxes and/or filing a return is a "voluntary" action.
This is dangerous and ruinous to you. If you are charged, not only will you have to pay back taxes, interest and penalties, but you will also be charged a $5,000 penalty fine as outlined in IRS Notice 2008-14 for filing a "frivolous tax return" or failing to file based on a "frivolous position".
The only thing thats "voluntary" in the tax code is the fact that it is up to individual citizens to calculate their own tax liability, and for individuals themselves to make arrangements to their finances in such a way as to legally minimize their tax liability. In a nutshell, the IRS does not periodically send out bills every April telling people how much they owe. But that would be nice.
Tax Fixers
Some tax scammers claim they can give you from zero or an extremely low tax liability, and then take your money by charging high service fees by skimming money from your return. These scams may come as amateurish, but some come looking slick and professional as your certified public accountant.
Legitimate ads might simply state that the company or person is available to prepare your tax return.
Again, keep in mind that you are ultimately responsible for what is on your tax return no matter who prepares it for you. If your name is on it, make sure you keep your name clean.
Tax Debt Settlement Schemes
When people owe the IRS large sums of money, people get desperate. And its this desperation this form of scammer targets. These tax scammers claim that they can settle these debts for pennies on the dollar.
The best these scammers can only prepare is an offer in compromise (OIC) on your behalf. Just in case you dont know, an OIC is a proposal to settle all taxes a heavily indebted taxpayer can submit to the IRS, which is rejected 75% of the time.
Take note that an OIC is mostly accepted in cases of extreme financial hardship, and if you can afford to pay a go-between to submit an OIC for you, its not a sign of extreme financial hardship.
by: Huey Harden
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