Recently, I appeared on the Big Biz Show with Russ and Sully to continue my Tax Day Countdown with what I call the “IRS Dirty Dozen”–which is a list of tax frauds that the IRS is looking to catch and penalize for.
You may have heard of some of these in the past or on the news; taxpayers and tax preparers are getting themselves in some serious trouble by trying to trick Uncle Sam. Learn what not to do:
Return Preparer Fraud
U.S. taxpayers more often than not find themselves in tax troubles after employing the services of a shady return preparer. Many of these preparers charge inflated fees or skim a portion of each refund. Ask around about your tax preparer before choosing to do business with him or her.
Hiding Income Offshore
In recent years, the IRS has become incredibly aggressive in finding taxpayers who hide their money overseas. So if you’ve got a bank account in an island somewhere that’s undisclosed, take advantage of the current IRS amnesty program before it expires in August, 2011.
Have you received a weird e-mail claiming to be from the IRS? Chances are, it’s a scam. The trend is that these emails will look real official with the IRS letterhead or insignia, but what actually happens is they will direct you to another website where they will harvest your personal information–including your bank account info!
False or Misleading Forms
Some scam artists use false information in order to procure tax refunds–don’t do this and make sure your tax preparer is trustworthy and honest. This can get you into a lot of trouble!
Nontaxable Social Security Benefits
Falsely exaggerating a Social Security withholding — thereby reducing taxable income — is a common scam that can result in a $5,000 fine straight off the bat.
Abuse of Deductions
Be wary of anyone who advises you to use a charity to shield income or claim excessive deductions. The IRS often opens investigations into such claims.
Heard from a guy who says the government has no right to collect taxes from you? Walk away. That’s a frivolous tax argument, and using it will only get you in trouble–just like it got Wesley Snipes in trouble along with a number of other celebrities.
Abusive Retirement Plans
Be cautious about following advice to shift assets into IRAs in order to avoid tax obligations. These moves are usually not allowed.
Disguised Corporate Ownership
Don’t use corporate entities to hide income or inflate deductions. This will only trigger red flags when the IRS reviews your return.
Reporting $0 in income, even when an employer has provided evidence of income to the IRS, is an increasingly common tax-avoidance scheme. It does not work, so don’t do it.
Misuse of Trusts
It’s a bad idea to use private annuity trusts and foreign trusts to shift income into or to deduct personal expenses from. The IRS is accustomed to investigating these claims.
Fuel Tax Credit
While farmers may be eligible for large fuel tax credits, the average taxpayer is not. Don’t follow any advice to file a large fuel tax credit.
The economy is tough on a lot of people, but don’t be tempted to cut corners when it comes to taxes. The IRS is getting a $1.1 billion increase in its budget for 2012, which will allow it to hire 5,000 more revenue agents to come after unpaid back taxes. Make no mistake about it–the IRS is running to catch up on collecting $345 billion in tax debt, this is not the time to cheat Uncle Sam.
If you find yourself in IRS trouble and need to talk to a tax relief expert, give our office a call at 888-699-7630 for a free tax relief consultation or visit www.TaxResolution.com for more information.
More Tax Help, IRS News and Tax Relief Tips:
- IRS Tax Help From Tax Expert: What Individuals and Businesses Need to Know to Avoid Tax Problems
- Tax Help: How to Resolve Your Back Taxes & Prevent Tax Problems If You’re Short on Cash This Season
- Tax Help News: If You Don’t File Your Taxes, the IRS May File Them for You
- It’s Not Too Late for Taxpayers with Unfiled Tax Returns to Resolve IRS Problems
- IRS Relief News: What Americans With Back Taxes Need to Know About Reaching Out to the IRS for Tax Help