The IRS' Dirty Dozen Tax Scams

Filed in archive Taxes on March 1, 2007

The Internal Revenue Service listed their annual "dirty dozen" tax scams last week. It's sort of a strange list, in that some of the scams are ways you can get scammed and others are ways you may try to scam the IRS. Either way, it's good to know what the IRS knows so you can find more creative ways to cheat. That's a joke, you know that, right?

Here they are:

1. Telephone Excise Tax Refund Abuses - Trying to get more than you deserve from this one-time only tax refund based on a tax that collected too much money.

2. Abusive Roth IRAs - Too complicated for my understanding.

3. Phishing - Following the band Phish around and forgetting to pay your taxes. Oh, wait, Phish broke up. This is actually a scam where someone pretending to be the IRS tries to scam you by getting you to give them personal info so they can rob you blind. See what I mean about these dirty dozen being a strange mix?

4. Disguised Corporate Ownership - I don't know, sounds Enronish.

5. Zero Wages - Some sort of scam to try to use tax loopholes to claim no income.

6. Return Preparer Fraud - Self-explanatory really. Your accountant or tax preparer fools you out of your money in one way or another.

7. American Indian Employment Credit - A credit used by businesses who employ Native Americans that is falsely used by others.

8. Trust Misuse - Sounds like a rich person's ruse.

9. Structured Entity Credits - something having to do with state conservation easement credits.

10. Abuse of Charitable Organizations and Deductions - Here's one for your average taxpayer, especially "Contributions of non-cash assets continue to be an area of abuse, especially with regard to overvaluation of contributed property." If you're giving away your 1980s Bongo jeans, they might not stillbe worth what you paid for them.

11. Form 843 Tax Abatement - Beyond my understanding.

12. Frivolous Arguments - I like this one purely for the name. Here's what it says: "Promoters have been known to make the following outlandish claims: the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; wages are not income; filing a return and paying taxes are merely voluntary; and being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don't believe these or other similar claims. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law."

The IRS also helpfully notes at the bottom of the Dirty Dozen that these are just the highlights and they have their beady eyes trained on any other falsities you might be contemplating as well.