The Internal Revenue Service today issued its annual “Dirty Dozen” list of tax scams that could trick taxpayers out of their money this tax season.

It's a list compiled by the IRS every year, and while it was released during tax season, these are schemes people can fall victim to at any point during the year.  However, the peak season for these schemes is filing season as people prepare their tax returns.

"This tax season, the IRS has stepped up its efforts to protect taxpayers from a wide range of schemes, including moving aggressively to combat identity theft and refund fraud," said IRS Acting Commissioner Steven T. Miller in a press release from the IRS. "The Dirty Dozen list shows that scams come in many forms during filing season. Don't let a scam artist steal from you or talk you into doing something you will regret later."

The IRS said its Criminal Investigation team works with the Department of Justice to shut down scams and prosecute the criminals behind them. Illegal scammers can face significant penalties and criminal prosecution.

Identity Theft

Tax fraud due to identity theft tops this year's Dirty Dozen list.  The IRS said often times, an identity thief will use a legitmate taxpayer's identity to file a tax return and claim the refund.

The IRS said in a press release that taking down identity thieves is a top priority for the IRS.  It's put additional steps in place to minimize identity theft and detect fraud before it occurs to limit the number of victims of identity theft.  In 2012, the IRS prevented $20 billion in fraudulent refunds from being issued - that's up from $14 billion in 2011.

The IRS posted tips for taxpayers, YouTube videos and an assistance guide on how to avoid identity theft on a special section of it website.  If you think your identity has been stolen, you're asked to contact the IRS Identity Protection Specialized Unit at 800-908-4490.


Taxpayers should be on the lookout for unsolicited emails or fake websites asking for personal and financial information. It's a scam called phishing and the IRS said, armed with that information, a criminal can commit identity theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

Also, the IRS reminded people it will never contact you by email to request personal or financial information.

Return Preparer Fraud

The IRS said choosing the right return preparer is important because it could result in fraud or identity theft.  It said only use preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers. It included tips on choosing a preparer, red flags and details on preparer qualifications at www.irs.gov/chooseataxpro.

Hiding Income Offshore

The IRS said it works closely with the Department of Justice to prosecute people evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds.

It reminded people, while there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements.  If not reported, you could get significant penalties and fines, as well as criminal prosecution. 

“Free Money” from the IRS & Tax Scams Involving Social Security

IRS reminded people to be wary of flyers or advertisements for free money from the IRS.  These scams suggest that a taxpayer can file a tax return with little to no documentation. These flyers have been appearing in community churches around the country.

It preys upon people with little to no income and elderly people; they wouldn't normally have to file taxes.  IRS said these scammers charge people money and offer bad advice, which includes making fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.

Impersonation of Charitable Organizations

The IRS said con artists will prey upon natural disasters by impersonating charities to get money or private information. It said this scam comes in many forms - scam artists could contact people via telephone to get money and information, or call victims posing as the IRS to help them file casualty loss claims or get a tax refund.    In the wake of Hurricane Sandy, the IRS cautioned both victims and people to only donate to recognized charities.  Also, be wary of charities with names similar to familiar or nationally known organizations. 

IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible.

Call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you are a disaster victim with specific questions about tax relief or disaster related tax issues.

False/Inflated Income and Expenses