If it sounds too good to be true…

March, 04 2014 by Carol Thompson, EA

Tax scams increase exponentially during the income tax filing season. If you want to avoid being a victim, be aware that when someone offers you a “chance of a lifetime” business opportunity or a fast IRS refund – without any income – it could be a scam. Some of the biggest offenders include:

• Multi-Level-Marketing (MLM): There are some solid business opportunities here, but many are not. When someone offers you a business opportunity based on bringing in yet more people below you, giving presentations to others, and as a result, being able to write off your house and all of your monthly bills, be very careful! Keep in mind that there must be a product, and you have to sell it to other people, and have a profit motive.


• Charity doesn’t always start at home: Sadly, many scam artists will set up phony websites for non-existent charities to steal money after a disaster. If you are contacted on the phone or on the internet and asked for personal information, it may be a scam. Do not give or send cash without verification. Ask for the name, address, and phone number of the organization, and then check online. You can check over 21,000 exempt organizations on the IRS website.


• “Free Money” from the IRS: This scam focuses on low-income and elderly individuals. A flyer may appear at a community church, or information is shared between friends and relatives. Scammers charge people who normally do not file a tax return to file for nonexistent tax “breaks,” then use the personal information to file bogus returns. By the time the IRS contacts the victims for filing incorrect returns, the scammers are long gone.

Each year the IRS publishes the “Dirty Dozen Tax Scams” for that year. The 2014 list should be available soon. Here is the 2013 list.

Educate yourself and stay vigilant with your personal information.