Protect Your Assets Against Common Tax Scams

With another tax season upon us, the importance of maintaining a good relationship with the IRS by following all tax rules and requirements is vitally important. Failing to file or pay taxes, not reporting income, or claiming a larger refund than you are owed could subject you to fines and penalties, while risking your money and property to potential liens and garnishment. In the interest of protecting your assets, be alert to disreputable tax preparers and promoters who prey on consumers. As a general rule, if it sounds too good to be true, it probably is a scam.

The IRS Dirty Dozen

Each year, the Internal Revenue Service compiles a list of the ‘dirty dozen’ tax scams that consumers should be aware of. This year’s list includes the following:

• Phone Scams: Beware of phone calls from scam artists claiming to represent the IRS and demanding payment you owe for back taxes;
• Phishing: Do not respond to emails claiming to be from the IRS requesting personal information.
• Fake Charities: Scam artists often claim to represent false charities asking for year-end contributions;
• Identity Fraud: Fraudulent preparers often set up shop to obtain personal information for the purposes of identity theft;
• Stolen Refunds: Make sure any refund you are entitled to is transferred directly into your account, rather than that of your preparer;
• Inflated Refund Schemes: Be wary of any preparer who claims they can get you a refund for more than you are usually entitled to;
• Offshore Tax Shelters: Resist the temptation to use illicit offshore accounts to shield income;
• Padded deductions: Padding your own deductions or allowing your preparer to pad them for you is tax fraud;
• Excessive business expenses: Make sure your accountant is only claiming legitimate business expenses;
• Income Reporting: Make sure any earned income is reported;
• Abusive Tax Shelters: Promoters may claim a shelter can help you avoid paying taxes, but the IRS is aggressive in uncovering and prosecuting these schemes.
• Frivolous and Unfounded Tax Arguments: If you currently owe back taxes and penalties, unethical preparers and promoters may claim to be able to reduce your debts on the basis of certain arguments. While you do have the right to contest liabilities, using frivolous arguments will cost you additional penalties.

Questions To Ask Your Tax Professional

Before entrusting a tax preparer with your tax return and personal information, Forbes recommends obtaining from them the following information:

• Their Preparer Tax Identification Number (PTIN);
• Information on their tax background, including special training, certification, and professional affiliations;
• Their experience in the types of matters you face and applicable state and federal laws;
• The documents they will require from you.

To make sure you are dealing with a reputable firm, ask around among your friends, family, and the professional community.

Reach Out to Us Today for Help

As your neighborhood law firm, one of our primary concerns at Cavallo & Cavallo is protecting your assets. If you have concerns about tax matters and how they could affect your income, accounts, and property, contact our experienced estate planning and asset management attorneys today. We offer professional legal representation you can trust in handling all your affairs. Call or contact us online today to request a consultation.

Resources:

irs.gov/uac/newsroom/irs-wraps-up-the-dirty-dozen-list-of-tax-scams-for-2016

forbes.com/sites/kellyphillipserb/2016/01/18/12-questions-to-ask-when-choosing-a-tax-preparer/#59d39e3db214