IRS Names Identity Theft, Phishing as Top Scams

February 16, 2012 Updated: March 7, 2012

With tax season underway, the Internal Revenue Service (IRS) identified identity theft and phishing—a deceitful practice involving the extracting of passwords and other personal information via fake emails and website—as the top two tax scams Americans should guard against.

The IRS released its annual Dirty Dozen list on Thursday as tens of millions of taxpayers file their yearly returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman in a statement. “Scam artists will tempt people in person, online and by email with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

Identity theft is by far the largest and most complex issue the IRS is forced to resolve during tax season, the agency said. It said that if a person believes their personal information was stolen for tax purposes, they should contact the IRS Identity Protection Specialized Unit.

Next on the list is phishing, which is “typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information,” the agency noted. With this information, the scammer can steal a person’s identity or steal money from them.

If one sees anything suspicious claiming to be from the IRS, the agency said not to open any attachments or click on any links contained inside the email. It implored people to forward the email to phishing@irs.gov.

The federal agency said return paper fraud is also common around tax season, with questionable companies and tax preparers skimming clients’ refunds or charging extra, unnecessary fees. The IRS said that phony tax return preparers don’t sign the return or place a preparer tax identification number on the form, don’t give you a copy of it, promise larger than usual refunds, or demand frivolous fees.

In the statement, the IRS did not give out statistics or figures on how much has been stolen via these schemes.

The agency said that “free money” from the IRS and scams involving Social Security is also a problem each year.

“Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country,” the IRS said. “These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.”

Hiding income offshore, false or inflated income and expenses, false 1099 refund claims, frivolous arguments, falsely claiming zero wages, abusing charitable organizations and deductions, disguised or false corporate ownership, and the misuse of trusts were also noted on the IRS list.