"Dirty Dozen" Tax Scams for 2003 (IR-2003-18)
In an update of their annual consumer alert, IRS has urged taxpayers to avoid falling
victim to one of what the IRS terms the "Dirty Dozen" tax "scams".
JAG Staff warns that the twelve identified transactions are:
- Offshore transactions via credit card, trust, or other arrangement, to avoid tax.
- Identity theft (unsuspecting bank customers sent fictitious bank correspondence and IRS
forms to disclose personal and bank data to crooks).
- Con artists sell phony tax payment checks, also called sight drafts, which are worthless
and have no financial value.
- African-Americans get special tax credits or refunds related to slavery reparations (IRS
received tens of thousands of claims in 2001, it is down to 50 a week in 2002).
- Employers are instructed not to withhold taxes from employee wages.
- Use of home-based businesses to facilitate improper deduction of personal expenses.
- "Pay the tax, then get the prize" schemes, in which individuals are told they
have won a prize if they pay the promoter the income tax due on it.
- Frivolous tax-protest arguments, e.g., "paying taxes is voluntary" or the
purchase of "un-tax packages" on the Internet.
- Frauds involving purported refunds of social security taxes in exchange for a (e.g.$100)
- Refund schemes in which individuals are asked to give their social security numbers to
- Sharing or "borrowing" of earned income tax credit dependents.
- Schemes in which a purported IRS agent comes to a taxpayer's home to collect taxes.