Warning! Tax Scam Alert

Have you ever been contacted by someone claiming to know a secret that will help you significantly reduce your tax bill or avoid paying taxes altogether? Have you ever received an e-mail from the IRS asking for personal information? If you've answered yes to either of these questions then you've probably had an encounter with a tax scam. We will look at seven common scams to help you avoid becoming a victim. Examining these scams will make you aware of what to look for if other scams come your way.

Impostor Web sites
The official IRS Web site is http://www.irs.gov/. Any other Web site claiming to be an official IRS Web site is a fake. Unfortunately, there are a lot of impostor sites out there, and many of them are engaged in identity theft. Some bogus sites are easy to spot for the seasoned Internet user because of their cheap appearance, but that same site may seem legitimate to someone who is less Internet savvy. Other sites may be difficult for even experienced users to sniff out, because they steal content from the real IRS Web site. To help all types of users, the IRS Web site has several pages dedicated to identifying fake IRS sites, including directions on how to report them.

E-mail Scams
E-mail scams are in a similar category. An e-mail scam may try to get your personal information by asking you to click on a link to a phony IRS site or another phishing site that will ask for personal information. E-mail can also contain damaging attachments that, if opened, can give hackers access to the personal information on your computer. The IRS does not initiate contact by e-mail, so if you receive an e-mail that appears to be from the IRS, you can assume it's a scam.Fake Tax Forms
One tax scam the IRS uncovered in 2008 involved a fake tax form purporting to be from a legitimate organization, the Taxpayer Advocate Service. This scam involved asking recipients for detailed personal financial information such as their bank account numbers, ATM PINs and credit card numbers, all in the name of getting tax refunds. In this case, the fake form arrived as an e-mail attachment. Just because this particular scam was uncovered doesn't mean that a similar one won't appear in your inbox or mailbox in the future, so be on the alert for any e-mail that requests person information.

Tax Protester Schemes
One longstanding tax scheme is the notion that you don't have to pay income taxes, because paying taxes and/or filing a return is "voluntary." The worst part is that if you are caught, not only will you owe back taxes, interest and penalties, you will also be fined an additional $5,000 penalty as outlined in IRS Notice 2007-30 for filing a "frivolous tax return" or failing to file based on a "frivolous position." The "voluntary" aspect of the tax code refers to the fact that it is up to individuals to calculate their tax liability and to arrange their finances in such a way as to legally minimize their tax liability. In other words, the government does not send out bills every April telling people how much they owe.

Fake Home Businesses
Some tax-scammers want to sign you up for a work-at-home business that they claim will allow you to take substantial deductions for personal expenses by turning them into legitimate business expenses. You would probably already identify most of these business setups as scams. For example, ads that say "Make $500 a week stuffing envelopes from your couch!" The scammers make money by selling you a kit that tells you how to make these supposedly legitimate deductions, or by selling you their tax preparation services.