Tax Scams: What You Really Need to Watch Out for

5 new tax scams for this year: Internet ScamBusters #171

Since this is tax season in the US, we’ll focus on five new tax scams today. Not surprisingly, some of these are very clever…

Let’s now look at some of the most popular tax scams out there…


Tax Scams: What You Really Need to Watch Out for


Tax scams never die. We’ve already written about a couple of common tax scams that are still making the rounds in a big way — so if you haven’t seen them, we suggest you check them out now:

IRS Notice with Web Form for Checking the Status of Tax Returns and Refunds is a Phishing Scam Phony Tax Form Scams (especially W-9095)

Let’s now talk about five new popular tax scams:

1. Who wouldn’t jump at a little extra money from the Internal Revenue Service?

2. Tax Return Preparer Fraud

3. Zero Wages Tax Scam

4. Bogus Government Grants for Taxpayers

5. “Dirty Dozen” Tax Scams for 2006

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1. Who wouldn’t jump at a little extra money from the Internal Revenue Service?

A new phishing tax scam with this Subject line is making the rounds. The email we saw includes a realistic looking (but bogus) IRS logo and falsely tells recipients that they are entitled to a refund of $63.80. The email says: “…after the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $63.80.” The phishing site they are sent to asks for social security numbers, as well as bank info. The purposes are identity theft and financial fraud. Action: Never click on these links, delete the email, and recognize the IRS doesn’t send tax refund notices via email.

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2. Tax Return Preparer Fraud

Unscrupulous tax preparers add fictitious expenses, false deductions and unallowable credits to a taxpayer’s return. They either file electronically or have the taxpayer sign blank forms. The tax preparers then have the refunds returned to them rather than taxpayers, and either keep all the money or a portion of the refunds as their fee. Taxpayers are then liable for additional taxes, interest and penalties. They are ultimately responsible, since they sign their tax returns under penalty of perjury. The IRS has recently published a list of warning signs that consumers can use to see whether their tax preparer is committing fraud against them, the IRS or both. The IRS is cracking down on these tax scams. You can find the factsheet here.

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3. Zero Wages Tax Scam

The Zero Wages tax scam is a fairly new taxpayer scam in which the taxpayer attaches an incorrect, substitute W-2 form (Form 4852) or an incorrect “corrected” Form 1099 that shows $0 (or little) wages or 1099 income, along with a statement that the taxpayer is rebutting info submitted to the IRS on the real W-2 or 1099 form.

The “explanation” often includes that the paying company refused to issue a correct W-2 or 1099 for fear of IRS retaliation. Action: We highly recommend you don’t do this — it is simple taxpayer fraud.

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4. Bogus Government Grants for Taxpayers

This telemarketing tax scam involves scammers posing as IRS agents calling potential victims and saying that their “good credit and timely filing of tax returns qualifies them for no-obligation government grants.” The pitch is that because the taxpayer is such a good citizen, they are going to receive a $10,000 grant from the government that they don’t need to repay. Naturally, the scammer only needs your bank account info to electronically deposit the money. And of course, the grants are for a limited time only, so the taxpayer must act quickly. (Since when does anything to do with government happen quickly?) ;-)

Action: Hang up. Don’t give your bank info to anyone when they call you on the phone for any reason.

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5. “Dirty Dozen” Tax Scams for 2006

Each year, the IRS announces its list of the most notorious tax scams. You can find this year’s DirtyDozen list here. Time to wrap up for today — wishing you a wonderful week.