Impersonation of Charitable Organizations

April 15th, 2014

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Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even 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.

Courtesy of the Internal Revenue Service Issue Number: 2014-16
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Abusive Tax Structures

April 11th, 2014

tax scheme

Abusive tax schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.
IRS Criminal Investigation (CI) has developed a nationally coordinated program to combat these abusive tax schemes.

Courtesy of the IRS Issue Number: 2014-16
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Hiding Income Offshore

April 8th, 2014


Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.

Courtesy of the IRS Issue Number: 2014-16


False Promises of “Free Money” from Inflated Refunds

April 4th, 2014

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Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds or refunds that people never
dreamed they were due in the first place.

Scammers build false hope by duping people into making claims for fictitious rebates, benefits or tax credits. They charge good money for very bad advice. Or worse, they file a false return in a person’s name and that person never knows that a refund was paid.

Courtesy of the IRS Issue Number: 2014-16
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False Income, Expenses or Exemptions

April 3rd, 2014

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Another scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income in order to maximize refundable credits. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as Earned Income Tax Credit could have serious repercussions. This could result in repaying the erroneous refunds including interest and penalties, and in some cases, even prosecution.

Courtesy of the IRS Issue Number: 2014-16
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Falsely Claiming Zero Wages or Using False Form 1099

March 28th, 2014


Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns.

Courtesy of the IRS Issue Number: 2014-16
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Return Preparer Fraud

March 27th, 2014

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About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns. Most return preparers provide honest service to their clients. But, some unscrupulous preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft.

Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

Courtesy of the IRS Issue Number: 2014-16
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Pervasive Telephone Scams

March 25th, 2014


The IRS has seen a recent increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims.

These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund.

Courtesy of the IRS Issue Number: 2014-16
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Seven Facts about Dependants and Exemptions

March 21st, 2014


The IRS has seven facts on these rules to help you file your taxes.

1. Exemptions cut income. There are two types of exemptions: personal exemptions and exemptions for dependants. You can usually deduct $3,900 for each exemption you claim on your 2013 tax return.

2. Personal Exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim and exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependant of another taxpayer.

3. Exemptions for dependants. A dependant is either your child or a relative that meets certain tests. You can’t claim your spouse as a dependant.

4. Some people don’t qualify. You generally may not claim married persons as dependants if they file a joint return with their spouse.

5. Dependants may have to file. People that you can claim as your dependant may have to file their own federal tax return.

6. No exemption on dependant’s return. If you can claim a person as a dependant, that person can’t claim a personal exemption on his or her own tax return.

7. Exemption phase-out. The $3,900 per exemption is subject to income limits.

Courtesy of the Internal Revenue Service: Issue IRS Tax Tip 2014-22
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Identity Theft

March 20th, 2014


Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity their uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.

Courtesy of the IRS Issue Number: 2014-16
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