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Be Wary Of 2010 Tax Scams

Updated on April 4, 2011

Tax penalties to Criminal prosecution

Like all other years, scammers want to take advantage of your 2010 tax needs. And if you become a victim of these tax scams, you can suffer a variety of consequences ranging from tax penalties to criminal prosecution.

To understand why you would be held responsible, remember the following guidelines in regards to tax scams:

* You assume responsibility for your 2010 return.
* No one can promise a big refund unless they have prior knowledge of your financial situation.
* The IRS expects you to read all of the fine print before you sign your tax return.

Tax Scams
Tax Scams

Common Tax Scams:

Fraudulent Preparation:

If you have to pay several hundred to get your taxes prepared, chances are you are dealing with a fraudulent individual.   It does not even matter if they have credentials, though if they do the scam becomes even harder to detect.  Either way, do not believe the hype regarding refunds.  While proper tax preparation does sometime reveal “hidden” deductions, the process does not deserve what some scammers charge. 

In any case, before you work with a preparer, make sure they have an IRS PTIN.  This identification number is now required of all tax preparers.  If they do not have it, chances are their business is not registered with the IRS.

Theft:

Other scammers will create phony websites for the sole purpose of stealing your identity.  Note that they do not have to take much to be successful.  Your name and Social Security are the only things scammers need to create a boatload of fraudulent credit cards.  Even worse is how some of these schemes are being conducted through phishing emails.  They create communication that looks like it came from the IRS.  But do not be fooled, as the IRS does not communicate through email.  If you are unsure, dial 800-829-1040 to discuss the issue with the IRS.

Junk Legalize:

Contrary to what some scammers say, paying taxes is not voluntary.  The arguments regarding the Constitution do not hold water, as neither the Fourth or Fifth Amendments refer to taxes.  And even though the IRS may use the word “voluntary” in their own writings, this is merely in reference to preparation.   No magic letter or telephone call will erase your duty to pay taxes.  So, if you see a scammer selling some stupid “no-tax” kit, you need to look the other way.

Have you come across a tax scam this tax season?

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