IRS 2007 “Dirty Dozen” Tax Scams

The Internal Revenue Service recently identified 12 of the most blatant scams affecting American taxpayers.

This year the “Dirty Dozen” highlights five new scams that IRS auditors and criminal investigators have uncovered. New to the Dirty Dozen this year are abuses pertaining to the special Telephone Excise Tax Refund, Roth IRAs, the American Indian Employment Credit, domestic shell corporations and structured entities.

Involvement in tax schemes leads to problems for scam artists and taxpayers. Tax return preparers and individual taxpayers risk significant penalties, interest and possible criminal prosecution. “Taxpayers shouldn’t let their guard down,” IRS Commissioner Mark W. Everson said. “Don’t get taken by scam artists making outrageous promises. If you use a tax professional, pick someone who is reputable. Taxpayers should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction.”

The IRS urges taxpayers to avoid these common schemes:

1. Telephone Excise Tax Refund Abuses

2. Abusive Roth IRAs

3. Phishing

4. Disguised Corporate Ownership

5. Zero Wages 

6. Return Preparer Fraud

7. American Indian Employment Credit

8. Trust Misuse

9. Structured Entity Credits

10. Abuse of Charitable Organizations and Deductions

11. Form 843 Tax Abatement

12. Frivolous Arguments

How to Report Suspected Tax Fraud Activity:

Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov, or by mail by calling 1-800-829-3676. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential. The person may also be entitled to a reward.

IRS ‘Dirty Dozen’ article

IRS ‘Tax Scams’ webpage