IRS Releases the Dirty Dozen Tax Scams for 2012

Feb. 16, 2012  WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax
scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes
ranging from identity theft to return preparer fraud.
1) Identity Theft
2) Phishing
3) Return Preparer Fraud
About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most
return preparers provide honest service to their clients. But as in any other business, there are also some who
prey on unsuspecting taxpayers.
Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return
preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should
choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering
individuals to cease preparing returns, and the Department of Justice has pending complaints against many
In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the
returns he or she prepares.
Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:
•        Do not sign the return or place a Preparer Tax identification Number on it.
•        Do not give you a copy of your tax return.
•        Promise larger than normal tax refunds.
•        Charge a percentage of the refund amount as preparation fee.
•        Require you to split the refund to pay the preparation fee.
•        Add forms to the return you have never filed before.
•        Encourage you to place false information on your return, such as false income, expenses and/or credits.
4)   Hiding Income Offshore
5) “Free Money” from the IRS & Tax Scams Involving Social Security
6)   False/Inflated Income and Expenses
7)   False Form 1099 Refund Claims
8)   Frivolous Arguments
9)   Falsely Claiming Zero Wages
10)  Abuse of Charitable Organizations and Deductions
11)  Disguised Corporate Ownership
12)  Misuse of Trusts
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