The IRS’ ‘dirty dozen’ of tax scams

Also: Sutter County residents can ‘Dine with a Deputy’

In a press release earlier this week, the Internal Revenue Service cited it’s annual “dirty dozen” list of tax scams.

Some of the scams listed are used more often during tax season, running the gamut from schemes for upping refunds to offering complex tax shelters.

Consumers are warned to be wary of aggressive calls and messages such as these (continued from page A1):

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers.

Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high.

Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return.

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than Rachel Rosenbaum rrosenbaum@ appeal democrat.com what they owe or potentially receive larger refunds.

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.

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.

Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore.

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.

Abusive Tax Shelters: Abusive tax structures, including trusts and syndicated conservation easements, are sometimes used to avoid paying taxes. 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.

Dine with a Deputy

The Sutter County Sheriff’s Office is hosting its first “Dine with a Deputy” event; similar to area coffee with a cop events. The meeting gives Sutter County residents a chance to meet deputies and address concerns within the community.

The event is Monday, March 25 from 9:30 a.m.11:30 a.m. at Starbucks (1294 Stabler Lane).

This weekly column is a catch-all for public safety topics. If there is something you think we should include, or if you have questions you would like us to pose to law enforcement officials, contact me by email at rrosenbaum@ appealdemocrat.com or call 749-4771.