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Some Tax Fraud Schemes You Should be Aware of

The clock is quickly winding down to file your taxes. As the April 15 deadline approaches, taxpayers in Maryland should be aware of the increasing risk of tax fraud. The Internal Revenue Service reports that between 2011 and 2013, there was a 400-percent rise in tax fraud related to identity theft.

We recently discussed how scammers are using threats of deportation to defraud recent immigrants. Now let's consider a few other schemes by which taxpayers can find themselves victimized.

First, it is important to closely guard your personal information. If you receive a phone call or an email from a person who purports to be an IRS agent, do not give any personal information to that individual. The IRS generally uses paper mail and does not request personal information from taxpayers through phone or email. Contact the IRS directly if you receive this kind of questionable correspondence.

There have also been incidents of fraud committed by tax preparers. If you need to hire someone to prepare your taxes, a rule of thumb is not to choose someone who charges a fee based on the amount of your refund. Also, do not let a tax preparer deposit your refund into an account which he or she controls. Your refund should go directly to you.

Sometimes people who are careful to protect their personal information still end up victimized by tax fraud. For example, many doctors' offices keep patients' Social Security numbers on file. However, an office employee could feasibly use that information to file a fraudulent tax return.

In any case, taxpayers should be on guard this season. Our tax law website has more on what to do if you find yourself in a tax controversy.

Source: CNN Money, "4 ways scammers can steal your tax refund," Blake Ellis, April 8, 2014

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