Each year, The Internal Revenue Service releases a “Dirty Dozen” list of tax scams with a warning to taxpayers to remain vigilant about these aggressive and evolving schemes throughout the year.
Their 2019 “Dirty Dozen” list highlights a wide variety of schemes that taxpayers may encounter throughout the year, many of which peak during tax-filing season. The schemes can run the gamut from simple refund inflation scams to technical tax shelter deals. A common theme throughout these: Scams put taxpayers at risk.
Taxpayers need to guard against ploys to steal their personal information. And they should be wary of shady promoters trying to scam them out of money or talk them into engaging in questionable tax schemes.
Here is a recap of this year’s “Dirty Dozen” scams:
For a detailed description of each scam, please refer to the list below:
- IRS’ 2019 “Dirty Dozen” tax scams list highlights inflating deductions, credits – See IR-2019-36
- Schemes involving falsifying income, creating bogus documents make IRS’ “Dirty Dozen” list for 2019 – See IR-2019-35
- IRS: Be on the lookout for promises of inflated tax refunds — 2019 IRS “Dirty Dozen” list continues – See IR-2019-33
- IRS: Choose tax preparers carefully; Tax return preparer fraud makes IRS’ 2019 “Dirty Dozen” list of tax scams – See IR-2019-32
- Identity theft remains on IRS’ “Dirty Dozen” list despite progress – See IR-2019-30
- IRS: Be vigilant against phone scams; Annual “Dirty Dozen” list continues – See IR-2019-28
- IRS kicks off annual list of most prevalent tax scams: Agency warns taxpayers of pervasive phishing schemes in its “Dirty Dozen” campaign – See IR-2019-26
Taxpayers should also be aware of the following potential scams or activities:
Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2018-47)
Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses. (IR-2018-49)
Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (IR-2018-58)
Abusive Tax Shelters: Abusive tax structures are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2018-62)
Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (IR-2018-64)