The Internal Revenue Service has released a list of scams to remind taxpayers to use caution this tax season.
Taxpayers can encounter these scams at any point during the year, but they are most prevalent during filing season, according to the IRS.
"Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen. “Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”
The following tax scams are the most common, with number one being the most widespread, says the IRS.
No. 10
Falsely Claiming Zero Wages or Using False Form 1099
Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a substitute Form W-2 or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. Such schemes can result in financial penalties or criminal prosecution.
No. 9
Frivolous Arguments
Promoters of frivolous schemes encourage taxpayers to make unreasonable claims to avoid paying the taxes they owe. Taxpayers who rely on frivolous arguments and schemes may face criminal prosecution for attempting to evade or defeat tax.
No. 8
False Income, Expenses or Exemptions
Another scam involves inflating or including income on a tax return that was never earned to maximize refundable credits. Claiming income you did not earn or expenses you did not pay could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution.
No. 7
Impersonation of Charitable Organizations
Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. They may directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.
No. 6
Hiding Income Offshore
While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled, according to the IRS. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.
No. 5
Tax Preparer Fraud
About 60 percent of taxpayers will use a professional to prepare their returns this year, says the IRS. It is important to choose carefully when hiring an individual or firm. Taxpayers should only use preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs).
No. 4
False Promises of “Free Money” from Inflated Refunds
Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds. Scam artists use flyers and phony storefronts and may even spread the word through community groups or churches, where trust is high, to search for victims.
No. 3
Phishing
Phishing is a scam typically carried out with the help of unsolicited e-mail or a Web site that poses as a legitimate site to lure in potential victims and dupe them into providing valuable personal and financial information. The IRS does not initiate contact with taxpayers by e-mail to request personal or financial information.
No. 2
Telephone Scams
Callers pretend to be from the IRS in hopes of stealing money or identities from victims. Scammers say the victims owe money or are entitled to a huge refund. Some calls threaten arrest or a driver’s license revocation if the victim does not cooperate.
No. 1
Identity Theft
Identity theft occurs when someone uses your personal information, such as your name, Social Security number or other identifying information to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.
More information on tax scams is available at IRS.gov.