Earlier in the month we covered the IRS’s first half dozen of the annual Dirty Dozen Tax Scams here, in this post.
Without trying to be too redundant … here are a few reminders with regards to the IRS and the methods of communication, which is frequently violated by scammers, making it easier to spot them!
How Do the Scams Work?
Con artists make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They convince the victim to send cash, usually through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.
The IRS Will Never:
Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
- Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.
- Call you about an unexpected refund.
IRS Dirty Dozen Tax Scams – The Second Half Dozen
Inflated Refund Promises
The IRS is warning tax payers not to sign a blank return on the promise of a big refund. Not only is it a bad idea to sign a blank return for obvious reasons, but not knowing what is on that return could create more problems than a tax payer can imagine.
Don’t do it, warns the IRS.
2018 Padding/Inflating of Deductions
Not only is the IRS warning tax filers to stay straight and not over inflate their deductions, but this year they are also warning Tax preparers NOT to falsely inflate deductions. Of course mistakes occasionally happen, but the tax code is actually pretty liberal, let’s all stay on the straight and narrow.
Don’t Make Up Income – What your kidding? We explain
Making up, or falsifying income sounds like a crazy thing to do … who in their right mind would do such a thing. Well it turns out this is a problem that occurs in order to get Earned Income Tax Credits.
The last thing you want to do is show MORE income than you earned … let’s not be silly here!
Don’t get talked into Frivolous Arguments
If it sounds too good to be true, do not go there. We do not have to look too far to see a fallen celebrity that bought into one of these cult like groups that says you do not have to pay taxes, and you should argue such. ALL and we mean ALL, of those partaking have found that YES, we do have to pay taxes, and rightly so.
Again, as crazy as it seems, according to the IRS, this is still occurring. Don’t bite!
Abusive Tax Shelters
Several decades ago there were a rash of invest one dollar and right off three on your taxes on various weird investments. If the only reason you are making an investment is to save taxes, turn your hat back around frontwards and ask yourself “What the heck am I doing?” Investments should be made for profit … let’s not lose sight of the forest for the trees.
If it sounds too good to be true, it is. Again, the code is relatively liberal in what we are allowed, no need to push the envelope!
Offshore Tax Cheating
Certainly we live in a more global, small, quick money moving world. This may lend itself to a thought of and Offshore Tax account. Again, not worth the trouble for the vast majority of the population.
If you do not have a need for an offshore account, savings taxes by opening one, is likely not a good idea. Earnings carry a tax liability, just the way it is.
Judge Learned Hand Closing Thoughts
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. public duty to pay more than the law demands.”
Given all the above, it is not our duty to pay one cent more in taxes than we owe, as can be gleamed from the judge.
We make every effort to pay as little taxes as possible, always between the line though!
Have a Great “Less Tax Scam” Day!
John A. Kvale CFA, CFP