Saturday, February 7, 2015
Wednesday, February 4, 2015
Falsifying Income to Claim Tax Credits Hits the IRS “Dirty Dozen” List of Tax Scams for the 2015 Filing Season
WASHINGTON — The Internal Revenue Service today warned taxpayers about schemes to erroneously claim tax credits is on the annual list of tax scams known as the “Dirty Dozen” again for the 2015 filing season.
“Scam artists don't miss a trick and they can entice taxpayers to falsely inflate income on returns to claim tax credits they are not entitled to receive," said IRS Commissioner John Koskinen. "Taxpayers are ultimately responsible for the information on their tax returns, and I urge everyone to file the most accurate return possible."
Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire professionals to do so.
Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.
Don’t Create Fake Income to Qualify for a Credit
Some people falsely increase the income they report to the IRS. This scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income, usually in order to maximize refundable credits.
Just like falsely claiming an expense or deduction you did not pay, claiming income you did not earn in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in taxpayers facing a large bill to repay the erroneous refunds, including interest and penalties. In some cases, they can even face criminal prosecution.
Taxpayers may encounter unscrupulous return preparers who make them aware of this scam. Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.
Here are a few tips when choosing a tax preparer:
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