Tax Scams To Be Wary Of: The Dirty Dozen List, (7-12)

Thanks for joining us again as we finish our little explainer on the 2019 “Dirty Dozen” tax scams you need to continue to watch out for this year. Every year, the IRS releases a “watchdog” style document that lawyers,  investors, and even the Taxmen themselves call the Dirty Dozen. In Part One, we covered six IRS and tax scams to be on the lookout for. Let’s explore the rest of the list, and learn how to dodge the other six scams the IRS warned us about.

#7: Identity Theft Scams

Identity theft affects millions of Americans, and REIS can be at particular risk. Criminals get heated around tax season, trying to get their hands on your info for nefarious purposes like:

  • Filing and padding false returns with your information
  • Padding bogus returns with ridiculous deductions, sometimes in the names of real or fraudulent dependents
  • Stealing critical documents of anyone else with vulnerable information for later use
  • Building big files of “legend” info for tax scams from investor information leaked through agencies or listed right on the public record
  • Creating IDs for bogus returns based on real information
  • Securing steady streams of Social Security Numbers to keep their scams going

And many more no-good-nick activities. Stay safe and protect your loved ones by guarding all personal info closely, preserving your anonymity online and in your investing, and keeping your guard up during Tax Season.

#8: Nonsensical or BS Lawsuits

As shameless as it sounds, people assemble all sorts of insane cases against the IRS. Sometimes these enterprising (read: frivolous) legal minds devise cases that sound compelling to those of you who, say, don’t deal with tax law for a living. But if someone tries to recruit you for a class-action suit that sounds even a little harebrained, that’s because it totally is. Liability suits against the IRS do happen, but if you’ve got a good case, you need an attorney, not some jerk who’s calling you to hop on a grimey business-side-of-lawsuits-bandwagon.

#9: Phone Scams

Seniors, you’re at particular risk of phone scams. They go something like this: you get a call from a stranger with impressive-sounding credentials and a totally unique secret way to beat the Taxman. Just ignore this nonsense, because there’s also a more common and serious problem of people making calls claiming to be IRS personnel. Don’t fall for it.

Avoiding this scam is easy: The IRS doesn’t make phone calls. Period. Just hang up stat--and if you have a real concern about your taxes, you can locate the real office you need on

But we all get weird calls, and here’s how to handle them: never give out personal information to strange callers. If you suspect your caller’s a robot, ask them directly (“Hey, are you a cyborg?) to see if you’re talking to a person or recording. Often these scammers are lazy, and your vigilance about avoiding strange callers’ demands and documenting without complying will keep you safe.

#10: Lying About Your Income

This can be a form of preparer fraud, but most of the time, the taxpayer is responsible. Falsifying income in any way is a horrible idea, so just don’t do it. There’s no benefit worth the trouble you can get into.

#11: Bogus Business Credit Claims

Brought to you by the geniuses who invented return padding, the practice of improperly filing business credit claims is widespread. Usually, the taxpayer just plain doesn’t qualify but takes the credit, or asserts a right to it anyway. It’s a spin on a false deduction, basically.

#12: Illegal Tax Sheltering

You can minimize taxes using many legitimate and legal strategies, as well as entities and other legal tools. But to do this, you’ve got to play by the rules. Often these problems come in the form of shady businesses promising high or even improbably huge savings. Any business directed at hiding from Uncle Sam is basically begging to get into a nasty tax dispute, and they WILL drag you into it  With so many legal options for decreasing tax liability, there’s no excuse for illegal tax shelters. Or getting busted.

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Last Updated: 
August 14, 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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