Tax scams: deductions you want to avoid
What’s worse than paying taxes?
Getting caught in a tax scam.
Every year at tax time, fraudsters come up with new variations on scams involving bogus refunds, fake audits and sure-fire methods to avoid paying or even filing taxes.
Whatever the method, the basic aim is to separate you from your hard-earned cash. Some may say the Internal Revenue Service has the same goal, but there’s a big difference -- if you lose money to a tax scam, you’ll still owe your taxes.
You can avoid most tax scams by remembering three basic rules:
* The IRS never sends unsolicited e-mails.
* The IRS never requests passwords, PINs or other secret access information for bank or credit card accounts.
* People who claim taxes are illegal -- and thus you don’t have to pay them -- are delusional, scammers or both.
Here are examples of recent tax scams. The new ones that crop up are likely to be variations on their themes.
Income taxes are illegal! The people who make this claim generally have thick notebooks or PowerPoint presentations and use them to cite historical or other evidence that you don’t have to pay taxes. Ever.
A variation is that taxes are purely “voluntary” based on the wording of tax laws.
The IRS has successfully waged court battles against these types of claims, showing that they were misinterpretations of the Constitution or laws, or simply fraudulent.
But, judging from federal lawsuits, people have paid millions of dollars for seminars, books and other materials claiming to show that taxes aren’t legal.
To truly avoid taxes and stay within the law, you have to be wealthy enough to hire experts in diving through loopholes.
For the rest of us, sham claims can lead to unnecessary cash outlays or legal troubles.
E-mail -- Your refund is ready: This one cropped up over the last couple of years. It’s an e-mail that appears to have come from the IRS, saying that the agency owes you an additional amount of money.
In the 2008 version, that amount in many cases was $134.80, leading to speculation that the messages were sent out from the same scammer or group.
What makes this e-mail particularly believable is that it’s not a claim that you’ve won a lottery you never entered or that a relative you’ve never heard of has given you an inheritance. The IRS really does give out refunds.
But, of course, not in this case. The first tip-off should have been that the e-mail was not sent to recipients by name -- it was just spam.
The e-mail requested the recipient’s credit or debit card number for “direct deposit.” But what the scammer had in mind was a withdrawal.
E-mail -- IRS online survey: Who wouldn’t want to tell the IRS what he or she thought of the agency?
Especially if the person doing the telling gets paid to do so.
In a scam e-mail that began circulating a couple of years ago, consumers were asked to take an online satisfaction survey about IRS services.
There were only eight questions and the payoff was $80, paid directly into your credit card account.
As in the refund scam, the victim was asked to enter credit card information, and then came a message saying, “Your account will be credited within the next 3 business days.”
By then, your money would be long gone.
E-mail -- See you in court: Perhaps the most disturbing of IRS scams cropped up last year in an official-looking e-mail that appeared to be from the U.S. Tax Court.
The message said that the “commissioner” of Internal Revenue was suing the recipient for not paying all taxes owed. For additional information on the matter, a link was provided to www.ustaxcourt.org.
But the real address for the court is www.ustaxcourt.gov.
The “org” site has been shut down. But generally, these kinds of fake pages are used by scammers to gather information to use in identity theft, or to disseminate viruses and other malware.
Who’s at the door?: It could be the IRS, but only if an agency representative has called ahead. Also, real IRS agents carry agency photo identification.
But the agency says there have been cases of impostors showing up at homes and demanding payments on the spot.
If there is any question about the legitimacy of a visiting agent, even if a call was received beforehand, you can check it out by calling the Treasury Inspector General hotline at (800) 366-4484.
Label trick: This is not strictly a scam because it doesn’t cheat you out of money. But it’s too good an urban myth to pass up.
The Snopes.com site, which does a great job exposing online myths, has in its collection a 2006 e-mail that claims you can avoid being audited by not using the pre-printed IRS label when mailing your taxes.
Supposedly, the label contains secret bar code information that could lead to you being chosen for an audit.
When Snopes inquired, tax accountants said they had been hearing that for years from their clients, even before the myth hit the Internet. But the IRS said the bar code had nothing to do with who gets chosen for an audit.
Too bad. I thought it would protect me from claiming my scam losses as business deductions.
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