WASHINGTON D.C. (WHNT) - The Internal Revenue Service has compiled a list called the "Dirty Dozen" to protect taxpayers from being scammed this tax season.
Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so. Taxpayers need to guard against any ploys to steal their personal information, scam them out of money or talk them into engaging in questionable behavior with their taxes.
Here is the list of this year's top tax scams:
Identity theft - This continues to be a problem. Make sure you are not giving out personal information to the wrong people.
Phone scams - IRS officials have said this is a major threat and they want to remind residents that they will never call threatening to arrest anyone for a tax issue.
Phishing scams - These are emails from criminals trying to get their hands on personal information. IRS officials have said they will never email a person to update any information or ask about tax issues.
Return preparer fraud - The IRS says that the majority of tax preparers provide honest, high-quality service, but there are several out there that set up shop to "perpetrate refund fraud, identity theft and other scams" designed to hurt taxpayers.
Hiding money - This is generally done by putting money in an offshore account to avoid paying taxes. Since 2009, the IRS has found over $8 billion from people trying to hide their money.
Inflated refund claims - Don't fall victim to promises of outlandish refunds. Scam artists will pose as tax preparers and lure victims in by promising larger than expected federal tax refunds. Do your homework before picking a preparer.
Fake charities - Scammers will masquerade as charitable organizations to attract donations from unsuspecting contributors. Make sure you vet the charity before you donate and don't give out personal information.
Falsely Padding Deductions on Returns - Taxpayers should avoid the temptation of falsely inflating deductions or expenses on their returns to under pay what they owe or possibly receive larger refunds.
Excessive Claims for Business Credits - Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is generally limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims generally involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses.
Falsifying Income to Claim Credits - Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by scam artists. Taxpayers are best served by filing the most-accurate return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing big bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution.
Abusive Tax Shelters - Don’t use abusive tax structures 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.
Frivolous Tax Arguments - Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims Even though they are wrong and have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.
For more information on the 2016 "Dirty Dozen" list click here.
The BBB of North Alabama has a tool you can use to report scams. Click here to view the north Alabama Scam Tracker.