Top Tax Day Schemes

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Top Tax Day Schemes

Tax Day is a favorite time of year for con artists, preying on the 140 million Americans who will file a return this year. The schemes can drain your bank account and leave you on the hook for penalties and prosecution. The Washington bureau has this gallery of schemes targeting taxpayers.

This con spreads through community churches and other places where word of mouth keeps it going. Schemers persuade victims with little income to file false claims to receive rebates and refunds that don’t exist. They might say people are eligible for a stimulus or Social Security payment, or college tax credit, even if they went to school long ago. If the IRS sniffs out the phony return, the victim responsible for filing accurate forms, could be subject to penalties.

This classic scheme involves unscrupulous tax preparers taking advantage of their “clients.” They chock 1040s full of bogus claims. They often inflate charitable or medical deductions to bank fat refund checks. Trouble is, if the IRS finds out, it’s the unsuspecting victim who gets in trouble. Federal law says taxpayers, not their preparers, are responsible for their returns. Sixty percent of filers will use professionals to complete their 1040s. “It is important to choose carefully when hiring an individual or firm to prepare your return,” the IRS says.

The emails look official enough, often claiming to be from the legitimate Electronic Federal Tax Payment System. But open the email and click on the link and you’re transported to a fraudulent site. The fraudulent websites prompt visitors to fork over personal and financial information. The crooks then use the data to commit identity theft. The latest version of this scheme involves emails appearing to come from the Taxpayer Advocate Service, which tells victims their return has been flagged for review. The IRS does not initiate contact with Americans via email.

Wondering why it’s taking so long to receive your tax refund? Perhaps someone has already claimed it. The criminals use Social Security Numbers and other personal information to file returns. They have the money sent electronically or to addresses where they can pluck the checks right out of the mail. More than half a million Americans have become victims. The crime has increased with the popularity of e-filings. The IRS now has 3,000 agents working identity theft cases, double the number in 2011.

Fraudsters claiming to be IRS officials call victims, saying they owe taxes and must pay using a debit card or wire transfer. Failure to comply, they say, will result in arrest, deportation or other consequences. The bad guys make their caller IDs indicate they are from the IRS. They also have the last four digits of victims’ Social Security Number. The scheme has hit every state, targeting 20,000 people. “This is the largest scam of its kind that we have ever seen,” the Treasury Inspector General for Tax Administration says.

Good-hearted people who thought they were donating to disaster relief may learn they were had when they try to claim charitable donations. Phony charities will use names and websites that mirror those of legitimate organizations to receive “donations.” They will not only take your money, they may also take your Social Security Number or other personal information to abuse later. The IRS detects the con when processing your return, leaving you responsible for filing a false deduction. The IRS maintains a listing of qualified tax-deductible charities. http://www.irs.gov/Charities-&-Non-Profits/Search-for-Charities

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This con spreads through community churches and other places where word of mouth keeps it going. Schemers persuade victims with little income to file false claims to receive rebates and refunds that don’t exist. They might say people are eligible for a stimulus or Social Security payment, or college tax credit, even if they went to school long ago. If the IRS sniffs out the phony return, the victim responsible for filing accurate forms, could be subject to penalties.

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