Tax Attorney Greenville - The Greene Law Firm

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Dirty Dozen Tax Scams

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The Internal Revenue Service has released its 2012 ‘Dirty Dozen’ list — the 12 tax scams you’re most likely to encounter this year.

 

Every year, the Internal Revenue Service publishes a list of the 12 tax scams agents are seeing most often. The annual list has become known as the “Dirty Dozen,” and it’s the tax-collecting agency’s way of warning taxpayers about scams they’re likely to encounter.

 

This year’s list includes identity theft, phishing and abuse of charitable donations.

 

Here are the scams the IRS considers the most prevalent and dangerous this year:

 

Identity Theft: The IRS is increasingly seeing identity thieves looking for ways to use a taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

 

Phishing: This is a scam typically carried out with the help of an unsolicited email or a fake website that poses as a legitimate site to lure potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

 

Return Preparer Fraud: About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most are honest. However, some prey on unsuspecting taxpayers.

 

Hiding Income Offshore: Many taxpayers have been identified as evading U.S. taxes by hiding income in offshore banks, then using credit cards or wire transfers to access the funds.

 

“Free Money”: Advertisements are circulating that taxpayers can get free money from the IRS by filing a tax return with little or no documentation.

 

Inflated Income and Expenses: Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits could have serious consequences.

 

False Form 1099 Refund Claims: In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount, to justify a false refund claim on a corresponding tax return.

 

Frivolous Arguments: Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe.

 

Zero Wages: Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero.

 

Abuse of Charitable Organizations: IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation.

 

Disguised Corporate Ownership: Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.

 

Misuse of Trusts: Some highly questionable trust transactions promise a reduction of income subject to tax.

   

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 IRS Problem Resolution
   

Aggressive Tax Collection Takes Toll on Advocate

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The government office created to help protect the rights of U.S. taxpayers and advocate on their behalf has been unable to keep up with IRS collection efforts, report finds

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Faced with an historic deficit, the federal government has taken an aggressive stance on tax collection.

 

It’s clear every day when you read the news: more money allocated to enforcement, more audits and criminal charges against celebrities as well as neighbors.

 

But a new study from the Treasury Inspector General for Tax Administration found this aggressive enforcement has come with an unwelcome, unfair side effect.

 

The Taxpayer Advocate Service, an independent office created in 1996 under the Taxpayer Bill of Rights 2, has been unable to keep pace with rising case numbers.

 

In other words, the taxpayer advocate hasn’t been able to keep up with its duties of advocating due to increased enforcement and case loads by the well-funded IRS, which this year is working with a record $5.5 billion enforcement budget.

 

“The Taxpayer Advocate Service plays an important role in tax administration by helping taxpayers who have tried, unsuccessfully, to resolve their tax problems using normal IRS channels,” J. Russell George, the Treasury Inspector General for Tax Administration, said in a statement. “However, I believe many of the issues identified in our review will continue to present challenges for this problem-solving organization.”

 

According to the Treasury Inspector General report, various internal and external factors have affected the Taxpayer Advocate Service’s ability to assist taxpayers in a timely way.

 

The primary factors sending more taxpayers to the advocacy service are the ailing economy, the IRS’s more aggressive enforcement and legislative changes that have left taxpayers with questions.

 

A rising number of taxpayers are also finding themselves in jams with the IRS due to identity theft.

 

In fiscal year 2006, the number of identity theft cases brought to the Taxpayer Advocate Service was

2,486. That figure increased to 14,023 in fiscal year 2009 — an increase of more than 460 percent.

 

In a letter included in the Treasury Inspector General report, National Taxpayer Advocate Nina E. Olson said the average workload for an advocate case manager has increased about 50 percent over the previous five-year period.

 

As a result, the report suggests, the Taxpayer Advocate Service has been unable to resolve taxpayer problems in a timely manner.

 

In fiscal year 2009, cases were open 80 days — an increase of 14 days over fiscal year 2005, or a 22 percent increase.

 

At present, due to the IRS’s historic enforcement budget and mandate to increase revenue collections, taxpayers are at a disadvantage when going to the office designed to advocate on their behalf.

 

Remember: A qualified tax professional can be your advocate as well.

 

   

American Tax Relief Scam

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I have several clients who have been scammed by the group calling itself AMerican Tax Relief.  Finally the FBI is looking into their operations.  Read about it here: http://tinyurl.com/33czwdx
   
Tax Attorney Greenville - The Greene Law Firm
Tax Attorney Greenville - The Greene Law Firm
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