Dirty Dozen 8 – Padding Deductions

Falsely padding deductions highlighted in IRS 2018 ‘Dirty Dozen’ tax scams

The Internal Revenue Service today warned taxpayers to avoid falsely inflating deductions or expenses on tax returns.

Common areas targeted by unscrupulous tax preparers involve overstating deductions such as charitable contributions, padding business expenses or including credits that they are not entitled to receive – like the Earned Income Tax Credit… Some taxpayers also may be tempted to take these steps in hopes of getting a larger refund or paying less than what is owed.  Preparing an accurate tax return is a taxpayer’s best defense against scams.

Read more here…

Dirty Dozen 7 – Improper Claims for Business Credits

IRS ‘Dirty Dozen’ list of tax scams for 2018 contains warning to avoid improper claims for business credits

Two common credits targeted for abuse by shady return preparers include the research credit and the fuel tax credit. Both credits have legitimate uses, but there are specific criteria that taxpayers need to qualify for these.

Congress enacted the research credit in 1981 to provide an incentive for American private industry to invest in research and experimentation. Such a claim must be substantiated and satisfy the requirements.

Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.  The fuel tax credit is generally limited to off-highway business use or use in farming.  Consequently, the credit is not available to most taxpayers.

Learn more about the research and fuel tax credits — and abuses — here.

Dirty Dozen 6 – Falsely Inflated Refunds

Taxpayers alerted against falsely inflated refunds in ‘Dirty Dozen’ list; Seniors, many others at risk.

Scam artists pose as tax preparers during tax time, luring victims by promising large federal tax refunds. They use flyers, advertisements, phony storefronts or word of mouth to attract victims.

Scammers frequently prey on people who do not have a filing requirement, such as those with low incomes or older Americans. They may also prey on non-English speakers who may or may not have a requirement to file a tax return.

Con artists dupe people into making claims for fictitious rebates, benefits or tax credits. They may also file a false return in their client’s name, and the client never knows that a refund was paid.

Read more about the phony, fraudulent methods used to victimize honest taxpayers.

Did you know the IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.  This tool can help taxpayers find a tax return professional with the right qualifications.  The Directory is a searchable and sortable listing of preparers registered with the IRS.

Remember to do your due diligence, and check the preparer’s history and ask the Better Business Bureau about the preparer:

Better Business Bureau
Serving Denver/Boulder
3801 E. Florida Ave., #350 | Denver, CO  80210
(303) 758-2100 Start With Trust®


Dirty Dozen 5 – Fake Charities

Taxpayers should be alert to scams involving disasters, worthwhile causes

The Internal Revenue Service warns taxpayers against scam groups masquerading as charitable organizations, luring people to make donations to groups or causes that don’t actually qualify for a tax deduction.  Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

The IRS offers these basic tips to taxpayers making charitable donations….

Publication 526 is a free booklet that describes tax rules that apply to making tax-deductible donations.

Dirty Dozen 4 – Tax Return Preparer Fraud

Taxpayers Urged to Choose Reputable Tax Preparers

The majority of tax professionals provide honest, high-quality service. But there are some dishonest preparers who operate each filing season to perpetrate refund fraud, identity theft and other scams that hurt honest taxpayers. That’s why unscrupulous preparers who prey on unsuspecting taxpayers with outlandish promises of overly large refunds make the “Dirty Dozen” list.  Read more here…

Tax return preparers are a vital part of the U.S. tax system. About 56 percent of taxpayers use tax professionals to prepare their returns.  Selecting the right tax professional is critically important because taxpayers are ultimately responsible for what they submit on their tax return.

Choosing a Paid Tax Return Preparer – Fact Sheet

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