Dirty Dozen Top IRS Scams for 2006
"First, the IRS NEVER communicates via email (other then auto-confirmations). All news, good and bad, arrives in the mail...
Each year the IRS issues a list of the 12 "most notorious tax scams" that it is monitoring...The IRS and the Courts have made it clear that 'involvement with tax schemes can lead to imprisonment and fines. The IRS pursues and shuts down promoters of these and numerous other scams. Anyone pulled into these schemes can also face repayment of taxes plus interest and penalties.'
THE 2006 DIRTY DOZEN:
1. Zero Wages.
In this scam, new to the Dirty Dozen, a taxpayer attaches to his or her return either a Form 4852 (Substitute Form W-2) or a "corrected" Form 1099 that shows zero or little wages or other income...
2. Form 843 Tax Abatement.
This scam...involves the filer requesting abatement of previously assessed tax using Form 843...
3. Phishing...
A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number...
4. Zero Return.
Promoters instruct taxpayers to enter all zeros on their federal income tax filings...
5. Trust Misuse.
Promoters doing nothing but selling trust packages urge taxpayers to transfer assets into trusts...[that they falsely claim] will reduce income subject to tax, create deductions for personal expenses and reduce estate or gift taxes...
6. Frivolous Arguments.
Promoters make totally false and misleading claims such as: 1. The Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; 2. Wages are not income; 3.
Filing a return and paying taxes are merely voluntary...
7. Return Preparer Fraud.
Dishonest return preparers skim a portion of their clients' refunds and charge inflated fees for return preparation services...
8. Credit Counseling Agencies.
[Some] credit counseling organizations...claim they can fix credit ratings. But all too often, they are merely pushing debt payment plans or impose high set-up fees or monthly service charges that may add to existing debt.
9. Abuse of Charitable Organizations and Deductions.
Tax-exempt organizations are constantly used in various ways to improperly shield income or assets from
taxation...
10. Offshore Transactions.
Individuals avoid U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore credit cards...
11. Employment Tax Evasion.
The promoter tells an employer not to withhold federal income tax or other employment taxes from wages paid to employees...
12. "No Gain" Deduction.
Filers attempt to eliminate their entire adjusted gross income (AGI) by deducting it on Schedule A..."
From Steve Leimberg's Estate Planning Newsletter # 942 (March 13, 2006) at http://www.leimbergservices.com
that is reprinted with permission at this You and Yours Blawg post .
