IRS Issues "Dirty Dozen" List of Tax Scams
The Internal
Revenue Service recently issued its 2010 “dirty dozen” list of tax
scams and cautioned taxpayers to beware of schemes that seem too good to be
true. Tax scams are illegal and can lead to fines and imprisonment. The IRS is
making it a priority to pursue and shut down the scammers but even the taxpayers
who get pulled into these scams often have to repay unpaid taxes and face interest
charges and additional penalties.
The IRS has highlighted twelve common schemes
and urges the public to avoid them at all costs. A warning
against abuse of charitable organizations and deductions makes the
list. Common types of abuse in this realm include arrangements
to improperly shield income or assets from tax and attempts by
donors to maintain control over donated assets or income from
donated property. The IRS also has its eye on schemes
involving the donation of non-cash assets, such as situations where
several organizations claim the full value for both the receipt and
distribution of the same non-cash contribution. Often these
donations are highly overvalued or the organization receiving the
donation promises that the donor can repurchase the items later at a
price set by the donor.
The Pension
Protection Act of 2006 imposed increased penalties for
inaccurate appraisals and set new definitions of qualified
appraisals and qualified appraisers for taxpayers claiming
charitable contributions.
Other schemes mentioned include
return preparer fraud, which tops the list. In these schemes, return
preparers skim a portion of clients’ refunds, charge inflated fees
or promise exorbitant refunds. In response to this increasing trend,
the IRS plans to implement new rules for future tax years that
include a requirement that all paid tax return preparers register
with the IRS and obtain a preparer tax identification number, as
well as comply with competency test requirements and continued
professional education. These new requirements will not apply to
attorneys, CPAs or enrolled agents.
For a full list of the "dirty dozen" tax scams, go
to
IRS's EO Update.
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