Why the IRS wants to help you avoid scams

It is somehow incongruous to actually trust the IRS to provide real protection and/or information on any subject.

However, if one realizes the IRS in extremely self serving, one understands immediately the nature of their helpful information: If you keep safe from identity thieves, hackers, scam artists and the like, you will retain more of your money. And if you have more money, the IRS can take more of your money.

Identity theft and phishing top the Internal Revenue Service’s (IRS) list of “dirty dozen” scams, which tend to peak this time of year as millions of Americans gear up to file their tax returns.

Scam artists will tempt people in person, online and by email with misleading promises about lost refunds and free money. Don’t be fooled by these scams.

While the “dirty dozen” schemes are common year round, many occur most frequently during tax filing season, the IRS said. The filing deadline for 2011 taxes is April 17.

The IRS did not give figures in its annual list for the amount stolen or not paid through scams.

Identity theft occurs when thieves use a taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

Allegedly, the IRS blocked more than $1.4 billion from going to the wrong person last year through identity theft; at least that is the agency’s claim.

Phishing is usually carried out through an unsolicited email or a fake website to lure potential victims and prompt them to provide personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

Among other scams, about 30,000 people have voluntarily disclosed foreign financial accounts since 2009 under a program to pay taxes on money returned to the United States. Yes, that money went to scammers, which is why the IRS is upset. It was supposed to be heavily taxed before going to back into the country.

The foreign accounts program was reopened this year. The IRS has collected about $3.4 billion under the 2009 program, and another $1 billion in upfront payments under a 2011 program. You now fully understand why they are keen to help you prevent fraud.

The “dirty dozen” list is rounded out by:

— fraud by return preparers

— scams promising “free money” from the IRS or tax schemes involving Social Security

— false or inflated income and expenses

— false claims for refunds from Form 1099, which reports income other than wages, salaries and tips

— frivolous arguments

— falsely claiming zero wages

— abuse of charitable organizations and deductions

— disguised corporate ownership

— misuse of trusts.

BISNAR | CHASE does not generally deal with tax issues, but we thought you should be informed about those you seek to separate you from your hard earned money.

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