The Internal Revenue Service has issued an alert warning Carbon County residents to avoid falling victim to the "Dirty Dozen" tax scams. The scams surface annually as tax filing season starts.
"Con artists shamelessly take advantage of people, charging fees for the illegal tax schemes," indicated Charles Rossotti, IRS commissioner. "People should be on-guard for these scams. If something sounds too good to be true, it probably is."
The federal agency cautioned Carbon residents to avoid the following common schemes:
Scam artists frequently advise employers not to withhold federal income or employment taxes from wages paid to workers. The schemes are based on an incorrect interpretation of tax law and have been refuted in court.
Con artists boast about never filing or paying taxes, then charge people a fee to share the secret.
Failure to file or pay taxes is subject to civil and/or criminal tax penalties, stressed the IRS.
Scam artists contact citizens with so-called prize information.
Callers advise winners that income taxes must be paid up-front and offer to collect the money so prizes can be delivered.
Local prize winners may need to make estimated payments in order to cover income taxes due at the end of the year, but payments should be directed to the IRS.
Prize givers generally send winners and the IRS a form showing the total value that should be reported on tax returns.
The untax for a fee scam is as old as snake oil, but Americans continue to be taken in by the fraudulent offers.
The ads frequently claim that paying taxes is voluntary, but U.S. courts have continuously rejected similar arguments.
Unfortunately, hundreds of citizens across the nation have bought untax packages before finding out that following the advice can result in civil and/or criminal penalties.
Numerous sellers of the bogus packages have been convicted on criminal tax charges.
In the Social Security tax refund scheme, victims pay "paper work" fees plus a percentage of refunds to have the con artists file claims with the IRS.
The law does not allow refunds of Social Security taxes. IRS processing centers are alert to the hoax and are stopping false claims.
Scam operators often try to "borrow" Social Security numbers or give out phony W-2 forms so it appears citizens qualify for big refunds.
The hoaxsters may promise to split the money with taxpayers, but the IRS catches the majority of the false claims before sending refunds. In the event the IRS sends a check, the participant usually ends up repaying the refund along with stiff penalties and interest.
Carbon County residents should never sign tax returns without verifying that the information is correct.
Unscrupulous tax preparers may suggest that clients "share" qualifying children in order to claim the earned income tax credit.
One client may have four children, but only needs to list two for EITC purposes and get the maximum credit. Another client has no children. The preparer will recommend listing two children on each client's tax return. The preparer and the client "selling" the dependents will split a fee.
The IRS prosecutes all preparers of fraudulent claims and participating taxpayers could be subject to civil penalties.
Con artists impersonating IRS agents appear at a private residence and attempt to personally collect taxes.
IRS special agents, field auditors and collection officers carry picture identification cards, explains the federal agency. The representatives normally try to contact citizens before making a visit.
To report IRS impostors, Carbon County residents should call the U.S. Treasury Inspector General's hotline toll-free at 1-800-366-4484.
Promoters charge $5,000 to $70,000 for hoax "trust" packages. Con artists claim the fee enables taxpayers to have documents prepared, utilize foreign and domestic trustees as offered by promoters and use foreign bank accounts or corporations.
Although the schemes give the appearance of the separation of responsibility and control from the benefits of ownership, the scams are in fact controlled and directed by the taxpayer. A legitimate trust is a form of ownership that completely separates responsibility and control of assets from all of the benefits of ownership.
Promoters claim taxpayers can deduct most or all of personal expenses as business costs by setting up a bogus home-based company. But the tax code firmly established that a clear business purpose and profit motive must exist in order to generate and claim allowable related expenses.
In order to sell expensive coin-operated pay telephones, con artists contend taxpayers can claim a $5,000 disabled access credit on federal returns because the communication devices have volume controls.
In reality, the access credit is limited to bona fide businesses coming into compliance with the Americans with Disabilities Act.
Thousands of African-Americans have been misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law. Promoters of reparations tax schemes have been convicted and imprisoned.
In conclusion, the federal agency encouraged Carbon County residents to report suspected tax fraud activities to the IRS at 1-800-829-0433.