Each year, the Internal Revenue Service compiles a list of the 12 most common, dangerous or costly tax scams. They call this list their “dirty dozen” and recommend that taxpayers stay vigilant during tax season. We will summarize these twelve scams for you, and highlight the steps you should take to protect yourself.
Tax preparer fraud has already appeared on the dirty dozen, and a similar scam is inflated refund claims. The IRS warns of dishonest tax preparers who promise large refunds, especially to seniors, low-income taxpayers, and others without a filing requirement. They may advertise through posters, community meetings, and fake storefronts. Once they have attracted clients, the scammers use fake 1099s or W-2s to lower the amount of taxes owed. They may also claim benefits or credits the taxpayer does not qualify for. The scammer may even claim the refund that the taxpayer is owed.
Remember that the taxpayer is responsible for information submitted on their behalf, and can also be penalized heavily for trying to submit falsified income documentation. Never use a tax preparer who suggests these methods, and always check the final return before submission. A legitimate tax preparer will always provide a copy of the return, and so taxpayers should choose their preparer carefully. Use the IRS Directory of Federal Tax Return Preparers with Credentials or check the state agency which licenses the tax professional.