Most common tax fraud in 2015: What are they and how to ward them off

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By: Phil Bradford
on 12th Apr,2016

Here is the list for 2015.1.2.3.4.5.6.
Most common tax fraud in 2015: What are they and how to ward them off


Every year, the Internal Revenue Service (IRS) publishes its Dirty Dozen list of the most grievous income-tax scams making the news. Here is the list for 2015.

1. Phone scams: Scammers call posing to be IRS officials or agents, often threatening deportation, police arrest, licenses revocation, or other legal actions in an attempt to get you to disclose your confidential information.

2. Phishing: Shady emails or web portals claim to be a refund or bill from the IRS; however, they're on the lookout to rob your personal data.

3. Identity thefts: These are more rampant every year. Scammers or identity thieves use personal data usually stolen via information security breaches for impersonating taxpayers and steal their refund dollars.

4. Return preparer frauds: The IRS claims almost 60 percent of taxpayers like you use tax professionals to prepare their annual tax return papers, but it is important to make sure that they are reliable.

5. Inflated refund claims: Be cautious of anyone who wants you to sign a blank tax return paper, promises a lucrative refund without having a look at your records, or levies fees based on a percentage of your tax refund, the IRS warns.

6. Falsifying income to claim credits: Certain cheats invent new sources of income to make false tax credit claims.

Tax fraud Jiu-jitsu

As already evident from the Turbo Tax refund scam that made the headlines this year, all sorts of tax refund fraud and various tax-related identity thefts have really taken off. To fend off these scammers isn't easy. But, legislators could opt to make some good straightforward changes that would ensure prevention of such unscrupulous acts in the long run. At the state and federal level, the Senate Finance Committee was informed by the assigned officials.

Making prepaid debit cards easily identifiable

Prepaid debit cards have become the currency of the tax scammers. This is because they're difficult to trace and the dollars are easily transferable. In many cases, identity thieves made use of these cards to collect tax refund after they had filed false state tax returns via TurboTax in this year. Chairman of the Utah State Tax Commission, John Valentine told legislators that the direct deposition information on the shady return found in Utah has been changed from the previous year's (2015) return.

He further added that, "We couldn't tell whether we were refunding to a prepaid debit card or to a legitimate bank account," he said. Both the State tax agencies and the IRS could more easily flag a shady tax return if Congressmen required the financial industry to place an identifier in their routing mechanisms as well as account numbers that indicated whether or not it's a prepaid debit card. He also told that, "We already do it with checking and savings accounts but not prepaid debit accounts."

Don't let third-party filing software vendors to charge for their services

Another common tax woes with the fraudulent state tax returns submitted via TurboTax came to be known as refund transfers. Actually, the scammers chose to have a third party filing fees, like that of TurboTax or similar other tax filing software vendors could charge for ; ones that could deducted from the taxpayers' refund money. Hence, the criminals had nothing to stake in such dubious transactions, while the third party filers were getting their payments and the states disbursed the refund.

Valentine recommended that the government should, "Prohibit the practice of applying refunds to payment of fees for filing services." Doing so might act as a deterrent for the fraudsters from filing at all, in the event of them having to pay the third-party filer themselves. And the process might make it easier to track them down as well.

Educate the masses more

Phone scams involving criminals acting as IRS agents has been found to be the No.1 tax scam of the year. And senior citizens are one of their biggest targets. Ellen Klem, consumer educationist at the Oregon Attorney General's Office said, "They answer their phones because they grew up in a time where they were taught it's rude not to answer the phone and listen to the caller on the other end." Klem also said that one of the easiest ways to curb this fraud is through more mass education and awareness. "Let people know this is a notoriously awful scam and it's not rude to hang up the phone. The more information and awareness we can get out there the better", she signed off. And, if you've become a victim of tax fraud, then you may know how to get your tax refund back.

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