By Francis Laryea, Spring 2015 Student Intern.
This week, we’re covering the Internal Revenue Service’s list of 12 scams, known as the “Dirty Dozen.” For Part III, we’ll be covering and explaining three more scams on the list and providing tips on how to protect yourself.
- Fake Charities – Keep an eye out for groups pretending to be charities. Some scammers are willing to take advantage your generousity. They tout supposed charities with legitimate sounding names to attract donations from unsuspecting contributors. IRS.gov contains tools taxpayers can use to check out the status of a charitable organization – like Exempt Organizations Select Check. Before you donate, do your homework.
- Hiding Income with Fake Documents– The forms we file along with our tax returns reporting income should not include inaccurate information. Filing a fake document could result in penalties, interest charges and criminal prosecution. Remember, you are legally responsible your tax returns. If your preparer suggests you lie on a document associated with your taxes, the IRS says that “is a huge red flag.”
- Abusive Tax Shelters– While most of us pay our fair share of taxes, if a tax plan sounds too good to be true, make sure it isn’t an illegal tax shelter. The IRS encourages taxpayers to seek out an independent opinion if they are offered a complex tax savings product to ensure it is legitimate.