IRS: Dirty Dozen Tax Scams Threaten Your small business

tax scams

You’ve worked hard for your business, and don’t want all that tough work destroyed by scammers aimed toward draining your organization of profits and cash flow.

Identity theft continues to steer the interior Revenue Service’s annual Dirty Dozen list of scams perpetrated on individuals and businesses.

The IRS issued its yearly list this week as tax preparation season reaches its peak, a time when scammers usually tend to defraud people in their money.

IRS Acting Commissioner Steven T. Miller said in an announcement accompanying the discharge of the list:

This tax season, the IRS has stepped up its efforts to give protection to taxpayers from a variety of schemes, including moving aggressively to combat identity theft and refund fraud. The Dirty Dozen list shows that scams are available in many forms during filing season. Don’t let a scam artist steal from you or talk you into doing something you are going to regret later.

Despite heightened efforts lately to counter identity theft, this actual scam continues to assert new victims once a year. At tax time, the IRS notes that folks who fraudulently obtain another person’s Social Security number and other personal and monetary information could file a tax return for that person and claim their refund.

The IRS notes in its reports at the Dirty Dozen list it’s has take steps to stop identity theft and detect refund fraud before it occurs, with enhanced systems.

Among the opposite preferable scams making the IRS list involving identity theft were phishing and return preparer fraud.

Phishing nabs sensitive personal and fiscal information through emails and bogus websites that pose as reputable sites from financial institutions. If an unsuspecting person enters information in this site, they’re greatly increasing the possibilities their identity would be stolen.

The federal tax agency also warned against fraudulent tax return services. While the IRS believes most tax preparers to be honest, reports of identity theft accusations, and other cases during which taxpayers were bilked out in their returns by preparers exist. The IRS adds a reminder that taxpayers should only use preparers “who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs).”

Many other items at the Dirty Dozen list from the IRS impact small business owners directly. Hiding income offshore, falsifying and inflating income and expenses, filing false Form 1099 Refund Claims, claiming zero wages and disguising corporate ownership are the foremost commonly perpetrated scams at tax time.

The IRS notes on disguising the ownership of a corporation to prevent paying taxes:

These entities can be utilized to underreport income, claim fictitious deductions, avoid filing tax returns, perform listed transactions and facilitate money laundering and monetary crimes. The IRS is operating with state authorities to spot these entities and produce the owners into compliance with the law.

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