Tax Scams and Warnings for 2017

Although many people and organizations, including church leaders and parishioners, believe they could never fall for a scam, every year, wide-eyed individuals learn the hard way that they’ve been deceived or taken advantage of. 

However, non-profits — such as churches — need to be doubly on guard. Rollie Dimos, director of Internal Audit for the Assemblies of God, says that recently the IRS sent out a notice stating that cybercriminals were targeting nonprofits to get personal information. One phishing scheme involves spoofing techniques that make a fake email look authentic. 

“As Christians, it’s in our nature to trust people and give others the benefit of the doubt,” Dimos says. “As a result, this makes us, and our churches, susceptible to these kinds of phishing schemes.”  

He also warns that cybercriminals are getting better at their craft.

“It might be easy to spot a fake email from a Nigerian prince who wants to send us money,” Dimos says, “but more and more, I’m seeing well-written and expertly-crafted emails that look like official correspondence from my bank, Ebay, or Paypal.” And especially during tax season, it is just as easy for criminals to make money through fake IRS correspondence. 

Recently the IRS released a list of its “Dirty Dozen” tax scams for 2017. What some may find surprising is the list doesn’t just target those trying to scam individuals, but also individuals who attempt to scam the government. 

Dimos believes all citizens have a moral and ethical responsibility to comply with applicable laws and regulations — including providing complete and accurate information on the annual income tax return. 

“As representatives of Christ, we should not understate our income or overstate deductions and expenses in order to cheat the system,” Dimos states. “When speaking about taxes, Jesus clearly taught to ‘render therefore unto Caesar the things which be Caesar’s.’ If we are not truthful when reporting taxes, we are sinning, and certainly not representing Christ.” 

According to an IRS news release, perpetrators of illegal schemes can face significant fines and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them. 

“Taxpayers should keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else,” the release urges. “Be sure the preparer is up to the task.” 

Dimos also advises caution when considering responding to what seems to be a legitimate contact that is in anyway tied to money or giving out personal information through using smartphones. 

“As more of us use smartphones to manage emails and social media, app creators purposefully streamline information in order to enhance our interaction and experience,” he says. “As a result, critical details about the email sender are hidden which makes it difficult to spot the fake emails. When in doubt, never reply to a suspicious email, but try to contact the sender through another method, like through a phone number or email that is already saved in your contact list.”

The IRS’s annual “Dirty Dozen” list highlights various schemes that taxpayers may encounter throughout the year, many of which peak during tax-filing season.

"We continue to work hard to protect taxpayers from identity theft and other scams," said IRS Commissioner John Koskinen. "Taxpayers can and should stay alert to new schemes which seem to constantly evolve. We urge them to do all they can to avoid these pitfalls — whether old or new."

Here is the IRS recap of this year's "Dirty Dozen" scams:

Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2017-15)

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation, and license revocation, among other things. (IR-2017-19)

Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized. (IR-2017-22)

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2017-23)

Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should make sure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2017-25)

Inflated Refund Claims: Taxpayers should be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records, or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts, and word of mouth via community groups where trust is high to find victims. (IR-2017-26)

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses. (IR-2017-27)

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. (IR-2017-28)

Falsifying Income to Claim Credits: Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution. (IR-2017-29)

Abusive Tax Shelters: The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. Be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2017-31)

Frivolous Tax Arguments: Don’t use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. The penalty for filing a frivolous tax return is $5,000. (IR-2017-33)

Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (IR-2017-35)

Dan Van Veen

Dan Van Veen is news editor of AG News. Prior to transitioning to AG News in 2001, Van Veen served as managing editor of AG U.S. Missions American Horizon magazine for five years. He attends Central Assembly of God in Springfield, Missouri, where he and his wife, Lori, teach preschool Sunday School and 4- and 5-year-old Rainbows boys and girls on Wednesdays.