Top Tax Scams that Rocked 2012

Last updated on April 1, 2013

The top five tax scams that rocked the country in 2012 were identity theft, i.d. phishing, tax preparer fraud, hiding income offshore, and “free money” promises from fake IRS solicitations.

Identity theft still rules the number one position on the IRS’ Dirty Dozen tax scams. For 2012, identity theft remained the most prevalent tax scam of all, even with the IRS combating the scam, there have been numerous cases of identity theft during 2012. The IRS’ effort comes on top of a growing identity theft effort that led to 2,400 other enforcement actions against identity thieves in 2012. The Criminal Investigation unit has devoted more than 500,000 staff hours to fighting identity theft.

I.D. Phishing, the most convenient method used by tax frauds to extract tax information of taxpayers, is a close second. Many taxpayers fall victim to tax thieves who use unsolicited emails, or fake websites that pose as legitimate ones to trick taxpayers into sharing their tax information. This scam is also used with the promise of free money from the IRS. Scammers will advertise through email, churches, websites, and phone calls.

Most tax preparers are honest, but some unscrupulous tax preparers use taxpayers’ to falsify information on their tax returns to claim false refunds. Taxpayers must take care when choosing a tax preparer.

Undeclared overseas accounts are dealt with strongly and swiftly by the IRS. They work closely with the Department of Justice (DOJ) to prosecute tax evasion cases. Reporting requirements are needed to be fulfilled to maintain financial accounts overseas.