IN THE KNOW
KNOW ABOUT TAX FRAUD AND SCAMS
APRIL 11, 2025 | FINANCIAL WELLNESS
As tax day approaches, we thought it would be helpful to share some insights on tax fraud and the various scams that can arise during this time. Tax fraud and scams pose serious threats to taxpayers and the integrity of the tax system. While the IRS's "" highlights specific schemes like phishing, fake charities, and fraudulent tax preparers, it's essential to recognize that tax fraud encompasses a broader range of deceptive practices. Tax fraud can occur in various forms, including the underreporting of income, creating fictitious deductions, or manipulating tax credits. Scammers often exploit taxpayers' lack of knowledge about tax laws, leading individuals to unwittingly participate in fraudulent activities.
Tax fraud is a significant issue that affects millions of taxpayers every year. It's estimated that tax fraud costs the U.S. government billions of dollars annually, with the IRS reporting that about $1 trillion in taxes go uncollected each year due to various forms of tax evasion. This can include underreporting income, inflating deductions, or failing to file altogether. According to the IRS's National Taxpayer Advocate, around 20% of taxpayers may be affected by some form of tax fraud during their lifetime. The progression of technology has made it easier for scammers to exploit individuals, leading to an increase in fraudulent activities and scams.
Tax fraud is a significant issue that affects millions of taxpayers every year. It's estimated that tax fraud costs the U.S. government billions of dollars annually, with the IRS reporting that about $1 trillion in taxes go uncollected each year due to various forms of tax evasion. This can include underreporting income, inflating deductions, or failing to file altogether. According to the IRS's National Taxpayer Advocate, around 20% of taxpayers may be affected by some form of tax fraud during their lifetime. The progression of technology has made it easier for scammers to exploit individuals, leading to an increase in fraudulent activities and scams.
To protect yourself from tax fraud and scams, consider the following strategies:
- 1. Stay Informed: Educate yourself about common scams and the latest tactics used by fraudsters. The IRS regularly updates its resources to help taxpayers stay aware.
2. Secure Personal Information: Be cautious about sharing your personal information. Use strong, unique passwords for online accounts and enable two-factor authentication where possible.
- 3. Verify Communication: If you receive a call or email claiming to be from the IRS, do not engage without verifying the source. The IRS typically communicates through official letters, and you can call them directly to confirm any claims.
- 4. Use Trusted Tax Preparers: If you choose to hire a tax preparer, ensure they are reputable and have a valid Preparer Tax Identification Number (PTIN). Research their history and reviews to avoid falling victim to fraudulent services.
- 5. File Early: Filing your tax return early can help prevent fraud, as it reduces the chances of someone else using your information to file a fraudulent return first.
While the Dirty Dozen highlights some of the most common tax scams, being aware of the broader landscape of tax fraud is crucial for protecting yourself. For more information, resources, and to report any suspicious activity, to be taken to the official IRS website.
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