The ‘Dirty Dozen’ tax scams the IRS wants you to avoid

by: washingtonpost.com

Taxes

Taxes (Photo credit: Tax Credits)

Each year the Internal Revenue Service ranks the most common scams people may face when they do their taxes. The IRS says these ‘Dirty Dozen,’ which range from identity theft to “free money”, peak during filing season.

No. 12: Misuse of trusts

The IRS described the potential pitfalls of a trust this way: “Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.”

No. 11: Disguised corporate ownership

The IRS says “third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.” Fraudsters can then use these entities to facilitate illegal activity such as money laundering.

No. 10: Abuse of charitable organizations and deductions

The IRS says it sometimes sees deliberate abuse of 501(c)(3) organizations, “including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property.”

No. 9: Falsely claiming zero wages

The IRS says that some schemers file a Form 4852 or a “corrected” Form 1099 to minimize their taxable income. The agency says that sometimes the perpetrator might argue in this scam that a company has refused to issue him or her a corrected Form W-2 “for fear of IRS retaliation.”

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About smartspending5

I am business-minded college student who has a heart for helping others attain emotional independence and psychological stability. My background lies in Broadcasting, network marketing, and Human Services. I believe that crises and extreme stress is necessary for one to grow and figure out what matters in life (Tony Robbins). This keeps me going when frustrations arise in my business. View all posts by smartspending5

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