Beware of these Tax Schemes
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The IRS released an updated version of its annual list of the most common tax scams. Several new scams, such as offshore banking and identity theft schemes have reached the top of the list. The IRS releases the list in hopes of educating consumers to prevent them from falling prey to these all-too-common cons.

Offshore Transactions: Some people use offshore accounts such as credit cards and trusts to hide or under-report income or to claim false deductions. This is illegal.

No Taxes Withheld: There are several schemes that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees. This scheme is borne from a misinterpretation of the tax law, and has been refuted in court.

Improper Home-Based Business: Promoters of this scam claim they can offer tax "relief" by deducting most or all of one's personal expenses as business expenses. They accomplish this by setting up a bogus home-based business. But the IRS comes down hard on this illegal tax avoidance.

Frivolous Arguments: Frivolous arguments, such as "paying taxes is voluntary," or "untax yourself for $49.95," are just plain illegal. Beware of these misleading advertisements, for the tax courts have continuously rejected such claims, and following such "tax secrets" can result in civil or criminal penalties.

"I Can Get You a Big Refund…for a Fee!": Some scammers will approach a victim offering them a phony W-2 which would entitle them to a larger refund. They may promise to split the refund with the person, when in reality the IRS catches most of these before they go out. If one does go out, though, the victim will later be stuck with paying back the money plus some hefty fines and interest fees.

As a general rule, if it seems too good to be true, it probably is. This is especially true in the case of taxation. Just remember to be wary of tax "professionals" making claims that they can drastically reduce your tax burden with some "simple moves." Again, take even greater caution if the person's compensation is any way tied the amount your tax liability is reduced. If you come upon anything for which you would like input from our firm, please feel free to contact our offices.