Monday, April 11, 2011

The 2011 "Dirty Dozen" Tax Scams

The Internal Revenue Service has released its annual report of swindles to dodge and scams to avoid when preparing your taxes:
“The Dirty Dozen represents the worst of the worst tax scams,” IRS Commissioner Doug Shulman said. “Don’t fall prey to these tax scams. They may look tempting, but these fraudulent deals end up hurting people who participate in them.”

The IRS works with the Justice Department to pursue and shut down perpetrators of these and other illegal scams. Promoters frequently end up facing heavy fines and imprisonment. Meanwhile, taxpayers who wittingly or unwittingly get involved with these schemes must repay all taxes due plus interest and penalties.

Here are the scams and frauds to look out for this year:

• Hiding Income Offshore
• Identity Theft and Phishing
• Return Preparer Fraud
• Filing False or Misleading Forms
• Frivolous Arguments
• Nontaxable Social Security Benefits with Exaggerated Withholding Credit
• Abuse of Charitable Organizations and Deductions
• Abusive Retirement Plans
• Disguised Corporate Ownership
• Phony Zero Wages informational returns
• Misuse of Trusts
• Fuel Tax Credit Scams

For more information on how to avoid these scams, see the link above.