Top Tax Scams for 2007 According to IRS

Every year, the IRS issues a list of the top tax scamsdoubts about their authenticity, call the agency.
the agency is seeing. Known as the "dirty dozen", here3. Structured Entity Tax Credit - The IRS is attacking
are some highlights of the 2007 list.an inventive scheme involving state conservation tax
1. Telephone Tax Refund - This one has the IRS hotcredits. The strategy works by having people set up
and bothered. For the first time in recent memory, thepartnerships that invest in state conservation credits.
IRS has started launching audits before the tax filingThe credits are eventually used up and a K-1 is issued
season has even ended! Why? The telephone taxto the partners who then take the credits on their
refund is being abused. The refund is the result ofpersonal return. The IRS is arguing that there is no
court rulings that a long-distance phone tax was beinglegitimate business purpose for the partnership, which
collected illegally. The IRS is allowing recovery of thismakes the strategy fraudulent.
tax for the past three years, but people are claiming4. Charity Abuse - An oldie, but goodie. The IRS is
outrageous numbers. If you do this, beware there is anhunting people that misuse charitable organizations. The
extremely high chance the IRS will be auditing you.idea is to contribute assets to the charity for a tax
2. Phishing - The IRS is warning taxpayers aboutbreak. The problem is the contributors retain control of
phishing scams designed for the purposes of identitythe assets, which makes it a sham contribution in the
theft. Scam artists are sending emails purportedly fromopinion of the IRS. There are other strategies as well.
the IRS to taxpayers suggesting that a form needs toThe important thing to understand is the IRS is very
be filled out to obtain something, often a refund. Theaggressive when it comes to charitable tax strategies,
link in the email takes you to a site that looks like theso make sure you are getting legitimate advice.
IRS site, but is not. Once you provide your financialPeople hate paying taxes. Tax avoidance strategies
information, you receive no refund but your identity isare entirely legal and should be taken advantage of.
used to carry out fraudulent transactions. The IRSTax evasion, however, is not. Make sure you know
never sends taxpayers emails, so go ahead andwhere the fine line is.
delete all "IRS" emails you receive. If you have any