Saturday, April 9, 2011

The IRS is on strict crackdown of taxpayers who attempt fraud, identity theft

Trying to pull one over on Uncle Sam during tax season doesn't add up, except in pricey penalties.

Trying to pull one over on Uncle Sam during tax season doesn't add up, except in pricey penalties.

Warning: The IRS is watching you.

In these tough economic times, everyone's looking to save a buck. But don't even think about cutting corners when it comes to filing your tax return.

The IRS chases down scamsters aggressively. Many end up facing heavy fines - and even jail time.

Just this past week, the feds requested bank information on U.S. citizens who may be using their India-based HSBC accounts to avoid paying taxes.

"They may look tempting, but these fraudulent deals end up hurting people who participate in them," warned IRS Commissioner Doug Shulman.

Even taxpayers who don't realize they've become entangled in schemes must repay all taxes due, plus interest and penalties.

Here are some of the most popular tax scams that you should avoid:

Hiding income offshore

Taxpayers often try to skirt U.S. taxes by concealing income in offshore banks and brokerage accounts, or using overseas debit and credit cards and wire transfers.

Do it at your own peril: The IRS pursues people involved in these shady offshore transactions, as well as those who facilitate schemes.

If you've done something wrong - or think you may have - and are ready to come clean, take note: The IRS recently launched a special voluntary disclosure initiative that could result in lower penalties than if you're caught. It's available through Aug. 31.

Identity theft

Don't let anyone steal your personal information, a common scam at tax time.

Beware of suspicious emails that pretend to be from the IRS but really are not. If you suspect your identity has been ripped off, contact the IRS Identity Protection Specialized Unit at (800) 908-4490.

Tax prep fraud

A dishonest tax preparer can cause you big headaches.

Be on the lookout for fraudsters who try to skim off a portion of your refund or make false promises.

Luckily, Uncle Sam has your back. The IRS is implementing new requirements for paid tax preparers, including registration with the IRS and a mandated preparer tax identification number.

Phony forms

Tempted to fabricate something on your return to get a fatter refund?

Big mistake.

The IRS has programs to combat tax form fraud and it stops the vast majority of incorrect refunds.

Charity abuse

The IRS is on the lookout for people trying to abuse tax breaks meant for charitable contributions.

One common scam: People donate items to a charity to get a deduction with an agreement from the organization that they can buy it back at a later date.

You may want to inflate the value of a donated item, but do yourself a favor and tell the truth instead.Better approach Tax experts before filing returns


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