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 our final post, we’ll be covering and explaining the last three scams on the list and providing tips on how to protect yourself.
- Faking Income to Claim Credits – One scam is making it look like you made money that you didn’t in order to maximize taxable credits. If you are inaccurately stating your income in order to claim a tax credit, reconsider. This can subject you to penalties or criminal prosecution.
- Excessive Fuel Tax Credits – Unless you use fuel in off-highway businesses (like farming), the fuel tax credit is not generally available to most taxpayers. The IRS says, however, that unscrupulous tax preparers convince taxpayers to erroneously claim the credit to inflate their refunds. The IRS is on the lookout for such schemes, thus if you are aware the credit does not apply to you, do not be swayed by your tax preparer.
- Frivolous Tax Arguments– Don’t disobey the law by making a frivolous argument against paying taxes. Several arguments have been thrown out of court, and if you make a frivolous argument, you might receive a $5,000 penalty or face criminal prosecution for attempting to evade or defeat tax. The IRS has a list of frivolous tax arguments that taxpayers should avoid.
We hope we have provided some helpful information as we conclude our review of the IRS’s Dirty Dozen on Tax Day.