IRS Announces 2008's "Dirty Dozen" Tax Scams

The IRS has issued a stern warning about these "dirty" tax scams, listing the twelve below as 2008's most common and dangerous.

1. Phishing:This now commonplace email scam that involves stealing personal information in the name of legitimate government and financial organizations is at the top of the IRS Dirty Dozen Tax Scams for 2008.



2. Economic Stimulus: There is some misinformation floating around out there about eligibility for the Economic Stimulus rebate. The IRS wants you to know that all you have to do is file a return to get your rebate.



3. Frivolous Claims: The IRS doesn't want you to heed any advice that encourages you to make unreasonable claims to avoid paying taxes. Uncle Sam has compiled a list of such "frivolous" claims and if you make one of them, you're subject to a $5,000 fine.



4. Fuel Tax Credit: Some people are claiming fuel costs as "nontaxable," when in fact such deductions are reserved only for farmers and others who use fuel for non-highway business purposes.



5. Offshore Shelter: Don't try hiding U.S. income offshore to avoid paying taxes—the IRS is on the lookout for such income sheltering.



6. Abusive Retirement Plans: Beware of Roth Individual Retirement Agreements, which the IRS considers abusive. Also, steer away from financial advisors who urge you to shift appreciated assets to Roth IRAs.



7. Zero wages: Typically a Form 4852 (substitute Form W-2) or a "corrected" Form 1099 is used to improperly reduce taxable income to zero.



8. False Claims: False claims for refund and request for abatement are not acceptable and will send Uncle Sam hot on your trail.



9. Preparer Fraud: The IRS wants you to beware of tax preparers who skim a portion of your refund to pad their own pockets or charge inflated fees for services



10. Disguised Corporate Ownership: Some people create "shell" corporations to hide a business or other income-generating activity and then use the anonymous entity to underreport income. The IRS is on the lookout, so don't be one of them.



11. Trust Abuse: Don't misuse trusts!



12. Abuse of Charitable Organizations and Deductions: Misuse includes arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets and over-valuing contributed property, all of which are unacceptable to the IRS.

Talley & Company wants to help you avoid costly tax scams and other potentially harmful mistakes. If you have questions about any of the items above, do not hesitate to contact our offices at (714) 867-2200 or email info@talleynco.com.