Beware of 2012 Tax Scams

BET.com breaks down "tax scams."

2012 Tax Scams  - Tax season is here and, if you haven’t already filed, use caution to protect yourself from a wide range of schemes ranging from identity theft to return preparer fraud. The IRS recently released a list of the “Dirty Dozen Tax Scams for 2012,” and BET.com breaks them down for you. —Danielle Wright(Photo: The Press-Register/Landov)

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2012 Tax Scams  - Tax season is here and, if you haven’t already filed, use caution to protect yourself from a wide range of schemes ranging from identity theft to return preparer fraud. The IRS recently released a list of the “Dirty Dozen Tax Scams for 2012,” and BET.com breaks them down for you. —Danielle Wright(Photo: The Press-Register/Landov)

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Identity Theft - Identity theft is one of the most popular and most complex tax scams the IRS handles. The organization is increasingly seeing identity thieves look for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund. If you receive an IRS notice informing you that more than one return was filed in your name, or that you received wages from an unknown employer, you may have been victimized.Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit. For more information, visit the special identity theft page at www.IRS.gov/identitytheft. (Photo: Nick Pandolfo/MCT/Landov)

Phishing - The IRS does not initiate contact with taxpayers by email to request personal or financial information; therefore, if you receive an email requesting personal information from the IRS, you could be a victim of a tax scam called phishing. Usually phishing scammers send unsolicited email or create fake websites posing as legitimate sites to prompt victims to share valuable information.If you receive an unsolicited email that appears to be from either the IRS or a government organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.(Photo: Kansas City Star/MCT/Landov)

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Phishing - The IRS does not initiate contact with taxpayers by email to request personal or financial information; therefore, if you receive an email requesting personal information from the IRS, you could be a victim of a tax scam called phishing. Usually phishing scammers send unsolicited email or create fake websites posing as legitimate sites to prompt victims to share valuable information.If you receive an unsolicited email that appears to be from either the IRS or a government organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.(Photo: Kansas City Star/MCT/Landov)

Return Preparer Fraud - Be careful of tax preparers. Most may be honest, but in some cases return preparers have skimmed off their clients’ refunds, charged inflated fees for return preparation services and attracted new clients by promising guaranteed funds.   In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.Signals to watch for when you are dealing with an unscrupulous return preparer include:−Preparer does not sign the return or add a Preparer Tax Identification Number.−Does not give you a copy of your tax return.−Promises larger than normal tax refunds.−Charges a percentage of the refund amount as a preparation fee.−Requires you to split the refund to pay the preparation fee.(Photo: CHRISTIAN HARTMANN/Landov)

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Return Preparer Fraud - Be careful of tax preparers. Most may be honest, but in some cases return preparers have skimmed off their clients’ refunds, charged inflated fees for return preparation services and attracted new clients by promising guaranteed funds.  In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.Signals to watch for when you are dealing with an unscrupulous return preparer include:−Preparer does not sign the return or add a Preparer Tax Identification Number.−Does not give you a copy of your tax return.−Promises larger than normal tax refunds.−Charges a percentage of the refund amount as a preparation fee.−Requires you to split the refund to pay the preparation fee.(Photo: CHRISTIAN HARTMANN/Landov)

Hiding Income Offshore - For years, individuals have been identified for hiding income in offshore banks, brokerage accounts or nominee entities. While there are legitimate reasons for maintaining financial accounts abroad, there are requirements that need to be reported. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution. At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) to encourage individuals to bring their money back into the U.S. tax system.(Photo: Rick Wilking/Landov)

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Hiding Income Offshore - For years, individuals have been identified for hiding income in offshore banks, brokerage accounts or nominee entities. While there are legitimate reasons for maintaining financial accounts abroad, there are requirements that need to be reported. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution. At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) to encourage individuals to bring their money back into the U.S. tax system.(Photo: Rick Wilking/Landov)

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Higher Taxes for More - According to a Tax Policy Center report, 88 percent of taxpayers would see their taxes rise by an average of $3,500 per year. Households with incomes of $50,000 to $75,000 would see an increase of $2,400 per year.  (Photo: Comstock/STOCK)

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“Free Money” From the IRS & Tax Scams Involving Social Security - Flyers advertising free money from the IRS and suggesting the taxpayer can file a tax return with little or no documentation is a scam commonly seen. The schemes have been appearing across the country in community churches and low-income areas. They are often spread by word-of-mouth by well-intentioned people who tell their friends. (Photo: Comstock/Getty Images)

The Real Cost of the "Fiscal Cliff" - Many Americans understand how a failure to avoid the "fiscal cliff" could hurt their pocketbook. According to a Gallup poll released Dec. 11, 75 percent of people agreed that the most negative impact on the country would be a hike in federal income and social security payroll taxes for most Americans. (Photo: GettyImages)

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False/Inflated Income and Expenses - Another popular scam is reporting income that was never earned. Claiming income you did not earn in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution. (Photo: Andersen Ross/Getty Images)

Taxes, Not So Much - What are American voters' top items on any president's to-do list? Creating good jobs, reducing federal government corruption and lowering the federal deficit are extremely important to 48, 45 and 44 percent of Americans, according to a Gallup poll published July 30. Environmental concerns like global warming and increasing taxes on the wealthy bottomed the list, each at 21 percent. (Photo: Tim Boyle/Getty Images)

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False Form 1099 Refund Claims - In this scam, the perpetrator files a fake information return, such as a Form 1099, to justify a false refund claim on a corresponding tax return. Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled, or willingly allow others to use your information to file false returns. The IRS reports, “If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.”(Photo: Tim Boyle/Getty Images)

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Frivolous Arguments - Don’t try to pay fewer taxes than you owe. The IRS has a list of frivolous tax arguments taxpayers should avoid. These arguments are false and have been thrown out of court.(Photo: Chris Hondros/Getty Images)

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Falsely Claiming Zero Wages - Filing phony information is illegal. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.(Photo: Detroit Free Press/MCT/Landov)

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Falsely Claiming Zero Wages - Filing phony information is illegal. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.(Photo: Detroit Free Press/MCT/Landov)

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Disguised Corporate Ownership - Third-party entities have been previously used to underreport income, claim fictitious deductions and avoid filing tax returns. This is illegal, and the IRS works with state authorities to identify these entities and bring the owners into compliance with the law.(Photo: The Press-Register/Landov)

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Disguised Corporate Ownership - Third-party entities have been previously used to underreport income, claim fictitious deductions and avoid filing tax returns. This is illegal, and the IRS works with state authorities to identify these entities and bring the owners into compliance with the law.(Photo: The Press-Register/Landov)

Misuse of Trusts - A common fraudulent scheme is for promoters to urge taxpayers to transfer assets into trusts. Some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses, and reduced estate or gift taxes. Taxpayers should seek the advice of a trusted professional before entering a trust arrangement.(Photo: Charlotte Observer/MCT/Landov)

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Misuse of Trusts - A common fraudulent scheme is for promoters to urge taxpayers to transfer assets into trusts. Some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses, and reduced estate or gift taxes. Taxpayers should seek the advice of a trusted professional before entering a trust arrangement.(Photo: Charlotte Observer/MCT/Landov)