Statistics Released on 2011 Income Tax Returns

The IRS’s annual list of the Dirty Dozen Tax Scams has been released. Taxpayers who use or fall victim to these scams expose themselves to additional taxes, penalties, and in some cases, criminal prosecution. There can also be nontax consequences, such as identity theft, which tops the list of scams this year. With the identity theft scam, a taxpayer’s personal information is used to file a fake return and obtain a refund. This delays the processing of the legitimate taxpayer’s return and, where applicable, the issuance of a refund.

Other scams include:

• Phishing to obtain a taxpayer’s personal information through unsolicited email or fake websites.
• Return preparer fraud where unscrupulous tax return preparers obtain fraudulent refunds or use taxpayer information for identity theft.
• Hiding income offshore to evade U.S. taxes.
• “Free money” from the IRS where scammer prey on low-income individuals with promises of free money from the government.
• Impersonation of charitable organizations, especially following major disasters, as a way to raise money as well as donors’ private information.
• False or inflated income and expenses to maximize refunds.
• False Form 1099 refund claims where a fake information return is used to then file a false refund claim.
• Frivolous arguments to avoid paying income taxes.
• Falsely claiming zero wages based on phony information returns to lower the amount of taxes owed.
• Disguised corporate ownership for underreporting income, claiming frivolous deductions, and even money laundering and other criminal financial activities.
• Misuse of trusts to erroneously make personal expenses tax deductible.

Source: IR-2013-33, March 26, 2013