Five tax scams to avoid

| 15 Feb 2012 | 08:35

    1. Phishing: Phishing is a tactic used by scam artists to trick unsuspecting victims into revealing personal or financial information in an electronic communication. Scams try to mislead consumers by telling them they are entitled to a tax refund from the IRS and they must reveal personal information to claim it. If you receive an e-mail that you suspect is a phishing attempt or directs you to an imitation IRS website, forward it to the IRS. 2. Return Preparer Fraud: Dishonest tax return preparers may skim a portion of their clients’ refunds, charging inflated fees or promising refunds that are too good to be true. To increase confidence in the tax system, the IRS is requiring all paid return preparers to register with the IRS, pass competency tests and continue education. 3. Hiding Income Offshore: Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts. IRS agents continue to develop their investigations of these offshore tax avoidance transactions. 4. Abuse of Charitable Organizations and Deductions: The IRS continues to observe the misuse of tax-exempt organizations. This includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets. The IRS also continues to investigate various schemes where donations are highly overvalued. 5. Frivolous Arguments: If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on These arguments have been thrown out of court.