tax scams

Tax Scams: Don’t be fooled

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Tax Advocate

Scam Awareness

Don’t be fooled by scammers pretending to be the IRS. Scammers target taxpayers and tax professionals each year in growing numbers. Oftentimes a scammer will contact you by telephone and alter the caller identification to make it look like the IRS or another official agency is calling. The IRS will not call you if you owe taxes without first sending you a notice in the mail.

Scammers may also use a scheme called “Phishing” to falsely lure you into telling them your personal information such as your social security number, bank information, credit card accounts, and more. Scammers will “Phish” for your information by asking you to verify specific details.

Don’t fall for these scams. The IRS provides tips and resources to help taxpayers and tax professionals learn how to spot a scam and what to do if you are a victim of a scam. Learn more about tax scams and how to recognize the signs of phishing and tax scams. It could save you from becoming a victim.

You should report all unsolicited email claiming to be from the IRS or an IRS-related function to phishing@irs.gov.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Beware the 2016 Dirty Dozen tax scams

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

taxes-blog-beware-the-2016-dirty-dozen-tax-scams

It’s not just the Internal Revenue Service that’s trying to get hold of your money. Crooks also are out in force during tax filing season.

These unofficial would-be collectors of your tax dollars are con artists, who over the years have come up with a variety of schemes, some quite sophisticated, to separate you from your cash.

Few new, but persistent ploys

The IRS issues an annual list of the top 12 tax scams. Most of this year’s Dirty Dozen are repeats of schemes the IRS warned about last year, ranging from the continuing threat of tax identity theft to phone scams to phishing.

Heck, the IRS says that sometimes we can’t trust apparent charitable groups or even our own tax pros!

The latest scams that the IRS is watching and wants us to keep an eye on, too, are:

  1. Identity theft
  2. Phone scams
  3. Phishing
  4. Return preparer fraud
  5. Offshore accounts
  6. Inflated refund claims
  7. Fake charities
  8. Falsely padding deductions
  9. Excessive business credit claims
  10. Falsifying income to claim tax credits
  11. Abusive tax shelters
  12. Frivolous tax arguments

Increased efforts to fight ID theft

When it comes to the top tax scam, the IRS points to Security Summit measures implemented this year to make it harder for crooks to steal taxpayer identities and refunds.

The IRS has added more filters to screen suspicious federal returns. Other Security Summit participants, which include state tax departments and the tax software industry, also have beefed up their defenses against fake return files, such as asking for taxpayer driver’s license numbers to help verify that filings are legitimate.

And, says IRS Commissioner John Koskinen, taxpayers must take preventative steps, too.

“We urge people to use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms,” Koskinen said. “Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary.”

If you do find that crooks have your personal or tax information, you can monitor your credit with free tools from myBankrate.

Year-round criminal tax activity

Most of the tax scams peak during filing season. However, tax crooks operate year round.

And schemes that appear to save filers some tax dollars can actually end up costing even more. Once the scam is revealed, victims will owe not only their tax bills, but also penalties and interest.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

IRS warns again about phone tax scams

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

taxes-blog-irs-warns-again-about-phone-tax-scams

Benjamin Franklin famously said that the only constants in life are taxes and death.

In today’s world, that saying has morphed into “the only constants in life are taxes and tax scams.”

Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, according to the Internal Revenue Service itself.

The scam artists purport to be IRS employees and threaten those they call with police arrest, deportation, driver’s license revocation and other things. They can be convincing, using fake caller ID numbers to make it look like it is the IRS calling and utilizing multiple fake agents, complete with phony IRS badge numbers, to reinforce their con.

Not new, but pervasive, scam

It’s not a new tax scam. It appeared back in the fall of 2013. By the next spring federal tax officials deemed it the largest tax scam ever.

The Treasury Inspector General for Tax Administration says it has received roughly 896,000 reports of the fake IRS agent calls, with more than 5,000 victims collectively paying more than $26.5 million to the crooks.

Now with the annual tax filing season underway, the IRS is seeing a surge of these fake IRS agent phone calls.

“Taxpayers across the nation face a deluge of these aggressive phone scams. Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money,” warns IRS Commissioner John Koskinen.

While the fake IRS agent telephone scam is still leading the tax con parade, there are a wide variety of tax schemes out there.

Many forms of tax scams

Some criminals try the tax carrot instead of stick, offering potential victims the promise of a huge refund. Sometimes the crooks say the tax money is related to a previously unknown investment or lottery winnings.

Regardless of how the tax ploy is pitched, don’t fall for it.

“We continue to say if you are surprised to be hearing from us, then you’re not hearing from us,” says Koskinen.

The commissioner also points out how you can tell the call is fake. The IRS, he says, will never:

  • Call to demand immediate payment. The agency will first mail you a bill.
  • Demand you pay taxes without giving you the opportunity to question or appeal the amount it says you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying your federal tax bill.

Protect your data

One way the crooks make themselves sound legitimate is by using victims’ names, addresses and other personal information. The idea is that by reciting this private information, the victim will believe it’s the IRS because who else would know all that stuff?

The reality is that the crooks do their homework. Hackers get into databases way too regularly nowadays, and the myriad stolen personal information is sold by one crook to others for use in cons like the IRS telephone scam.

Worried about identity theft? Make sure your personal and financial data are secure. You can keep track of your credit with free tools from myBankrate.

And be careful out there — this filing season and year round. The only thing worse than paying taxes to Uncle Sam is paying a fake tax bill to con artists.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

 

“Dirty Dozen” Tax Scams

Westchester NY accountant Paul Herman has all the answers to your personal finance questions! IRS Commissioner Doug Shulman recently stated “taxpayers should be careful and avoid falling into a trap with the Dirty Dozen. Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

The Dirty Dozen are the 12 most prevalent scams detected by the IRS. Taxpayers should take precautions to avoid these and other suspicious activities of scam artists. The following scams make up the IRS’s 2014 “Dirty Dozen” listing (courtesy of IRS.gov).

  1. Identity Theft. Topping this year’s list is identity theft. The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent re-fund.
  2. Pervasive Telephone Scams. The IRS has seen a recent increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims. These phone scams include instances where callers say the victims owe money or are entitled to a huge refund. If you get a phone call from someone claiming to be from the IRS, here’s what you should do: If you know you owe taxes or you think you might owe taxes, call the IRS at 800-829-1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.
  3. Phishing. Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure potential victims and prompt them to provide valuable personal and financial information that can be used to commit identity or financial theft.
  4. “Free Money.” Scammers have been preying on low-income individuals and the elderly by posting flyers in community churches promising that tax returns can be filed with little or no documentation to receive “free money” from the IRS or Social Security Administration.
  5. Return Preparer Fraud. Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services, and attract new clients by promising guaranteed or inflated refunds.
  6. Hiding Income Offshore. Individuals continue to try to avoid paying U.S. taxes by illegally hiding income in off-shore accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities, or insurance plans.
  7. Impersonation of Charitable Organizations. Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.
  8. False/Inflated Income and Expenses. This tactic is used by scam artists who file false or misleading returns to claim refunds they are not entitled to receive. One popular scam is to report income that was never earned to obtain refundable credits.
  9. Frivolous Arguments. Frivolous scheme promoters encourage people to make unreasonable and unfounded claims to avoid paying taxes.
  10. Falsely Claiming Zero Wages. Filing a phony wage-related or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed.
  11. Abusive Tax Structures. What is an abusive scheme? The Abusive Tax Schemes program encompasses violations of the Internal Revenue Code (IRC) and related statutes where multiple flow-through entities are used as an integral part of the taxpayer’s scheme to evade taxes. The schemes are usually complex involving multi-layer transactions for the purpose of concealing the true nature and ownership of the taxable income and/or assets.
  12. Misuse of Trusts. Unscrupulous promoters have urged taxpayers to transfer assets into trusts, promising reduced taxable income, deductions for personal expenses, and reduced estate or gift taxes that don’t deliver as promised.

Please contact us if you are concerned about these or any other questionable activity.

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.