Tax Scams To Be Wary Of: The Dirty Dozen List, (1-6)

The IRS released its 2019 scam watchlist, affectionately known as the Dirty Dozen. What should you watch out for during this year’s tax season? Learn the latest below, and remember, it’s okay to be skeptical of any officer claiming to originate from the IRS.

#1: Illegal Use of Off-Shore Accounts

We’ve shared before about the legal use of off-shore banking, which is safe. Unfortunately, anyone illegally convincing you to use off-shore accounts to evade taxes is dragging you down a dark path. Should you follow, you’ll pay the price.

#2: Phishing Attacks

Phishing is better known as “that scummy move where people send convincing-looking fake emails to steal your log-ins.” For those unfamiliar with Scumbaggery, you’ll get an email that looks like it’s from, say, Your Bank. But it isn’t from Your Bank. It’s from some jerkface who wants you to believe he’s Your Bank, so you’ll unwittingly give him Your Banking credentials.

Watch emails closely. Unless you know someone personally, don’t take identities for granted online. An email from that’s consistent with other emails from Your Bank isn’t a phishing attack, and there’s nothing wrong with calling Your Bank (or whichever institution the caller claims to represent) to confirm.

Phishing preys on the implicit trust we have in our institutions and your laziness. Phishers hope you don’t look closely at the email. Awareness is your best defense.

#3: The Bogus Tax Return (Preparer Fraud)

You can avoid this one by simply ensuring your tax preparation professional is qualified and ethical. CPAs usually won’t pull this move, but fake pros crop up every year, sadly.

#4: Refund Scams

This type of preparer fraud involves shady characters claiming to be experts promising you absurdly high refunds. This should set off your BS detector--vet the provider or switch if this offer isn’t the first red flag.

#5: The BS Charity

We hope there’s a special place in the afterlife for people who invent fake charities. But hey, it’s their souls--just don’t donate to one or it’s your behind on the line. Uncle Sam can’t get your money back. Further, deductions toward fake charities don’t count, which leads us to...

#6: Return Padding and False Deductions

Yeah, people really try. Unethical preparers have been busted cooking books or creating a laundry list of bogus undeserved deductions to get a huge refund, usually to “earn” themselves a cut. The scam and how the preparer profits may vary. Consider this your fourth consecutive warning to be careful who you let do your taxes.

Including you. Many individual taxpayers have taken liberties with deductions, and even outright invented false deductions. There are times when ethical people are tempted to break the rules in life. But when you’re filling out a tax return isn’t one of those times. Save your rebellious side for the stage, the canvas, the negotiating table, the board room, the bedroom, or really anywhere that won’t get you into a hot mess with Uncle Sam. That’s not legal advice, by the way--that’s just good old-fashioned American common sense.

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Last Updated: 
August 6, 2019

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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