Tax relief. Predators scan through tax lien notices to see who’s in deep with the IRS, then offer them tax relief services which are fraudulent. You pay them, and voila, your money not only is gone, but so is the “service.” You’re now further sunk in debt.
- A fee, usually high, is required in advance.
- These scams may be advertised on TV and radio.
- They may also come as an unsolicited snail letter or e-mail, saying that you qualify for some governmental plan.
- The company offering the solution may suddenly disappear.
- If some kind of tax payment plan seems too good to be true, assume that it is.
IRS giving away money. When pigs fly. But really, this scam makes its rounds: flyers and ads claiming free money from Uncle Sam, suggesting you can file a return with minimal or no documentation. These postings often appear in churches. People see them and innocently spread the word.
Abuse of 501(c)(3). Numerous types of nonprofit organizations are exempt from certain kinds of federal income taxes. Some organizations will create schemes to become exempt, including ploys that fraudulently shield income from taxation.
Corporate ownership disguise. A third party is fraudulently used to request EIDs (employer identification numbers). The third parties then form corporations that muddle the business’s true ownership standing.
Trust misuse. Transferring assets into trusts may have some legitimacy, but shady promoters have also encouraged people to do this in an improper way. These transactions don’t live up to their promise of reducing taxable income or maximizing deductions for giving gifts or for personal expenses.
Inflated income & expenses. Though some businesses deflate income to lower what they owe, others will inflate it to optimize refundable credits. They may also claim expenses they never paid.
Hiding income offshore. Some people and businesses, to avoid paying taxes, hide income in offshore accounts. They use credit or debit cards, or wire transfers to gain access to their funds. Other people will use employee-leasing schemes, employ foreign trusts, or use insurance plans or private annuities to get access.
Fake forms. Someone files a false information return, like the Form 1099 Original Issue Discount, to validate a fake refund claim on a corresponding return. Some have made false claims for refunds based on the sham theory that the IRS has secret accounts for U.S. citizens and that one can gain access to these accounts with the 1099 OID form.
Ridiculous attempts at write-offs. Businesses claiming crazy, frivolous claims to avoid paying owed taxes like that business trip to Mardi Gras. The IRS will recognize many frivolous tax arguments and will toss them out of court.
Robert Siciliano is an Identity Theft Expert to AllClear ID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen. See him knock’em dead in this identity theft prevention video. Disclosures