IRS attorneys say that most of us don’t think of the IRS as an agency focused on consumer protection. If fact, many Americans who owe back taxes and are subject to wage garnishment, IRS levies and/or IRS liens would say the IRS is anything but consumer friendly. But in truth, IRS tax lawyers suggest the agency is very consumer- minded and does attempt to help taxpayers avoid problems by, among other things, releasing an annual “dirty dozen” list of tax scams to avoid. This year’s list includes a host of subjects which have been on many of the news wires for months, if not years.
For those taxpayers who do venture into one of these tax scams, IRS attorneys warn the consequences may be costly and result in large bills for back taxes, interest and penalties. For those who seek to take advantage of unsuspecting taxpayers, the result will likely be large fines and possible jail time. So, here is the IRS’s Top 12 Things to Avoid:
1. Don’t get tricked into hiding income off-shore. As many have come to learn the hard way, failure to report income in off-shore accounts is both costly and may result in criminal prosecution.
2. Don’t become a victim of Identity Theft and Phishing. Recently, IRS attorneys have noted a spike in the number of identity theft cases and warn the public that anyone who get’s their information may use it to file a false tax return to conceal income and/or to receive a refund for which the thief is not entitled.
3. Don’t hire a tax return preparer without doing some homework. While IRS tax lawyers say the agency is trying to address the problem with competence testing and new registration requirements; and further, these IRS attorneys point out that the vast majority of tax return preparers are honest, hard-working folks, a dishonest preparer can cost you.
4. Don’t file false or misleading forms with the IRS.
5. Don’t make frivolous arguments to avoid paying back taxes. The consequences may include fines, penalties, interest, and more.
6. Don’t exaggerate a withholding credit for non-taxable Social Security benefits. The penalty for such conduct is $5,000.
7. Don’t try to shield income and/or assets by abusing Charitable Organizations and/or Charitable deductions.
8. Don’t abuse retirement plans. One example would be taking early distributions without reporting the income.
9. Don’t try to hide or otherwise disguise corporate ownership.
10. Don’t file a false tax information return. Reporting a zero or lower amount to reduce tax liability is a crime.
11. Don’t misuse Trusts. IRS tax attorneys say some unscrupulous promoters encourage taxpayers to use hide income in trusts to reduce tax liabilities.
12. Don’t get caught up in a fuel-tax credit scam. Fraud involving the use of fuel tax credits can subject a taxpayer to a $5,000 penalty and more.
If you believe you have been the victim of a tax scam, you are encourage to report it to the IRS, or in the alternative, meet with a competent IRS tax attorney to get the information you need to address the problem.
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