The 12 Biggest Tax Scams of 2019

We all like to consider ourselves smart. But it doesn’t stop there. Most of us like to think of ourselves as intelligent, but also shrewd, discerning, and street smart. We aren’t here to dispute that. On the contrary, we agree with you! Because if you’re reading this right now, we know you’re well aware that fraud and financial peril are seemingly around every corner in 2019. And that includes some of the biggest tax scams of 2019.

The real problem isn’t gullible people being duped into sending their information to a long lost prince, it’s savvy scammers who have more tools than ever at their disposal to take your information and get away without a trace.

In 2019, the IRS has identified a “Dirty Dozen,” the twelve scams that you absolutely need to avoid.

So we’re here with the 12 biggest tax scams of 2019—and how to avoid them.

The Top 12 Tax Scams of 2019

This is a long list, so we’re just here with the basics: the scam and how to avoid it.

1. Phishing

The Scam: You may not realize, but you’re probably already familiar with phishing. These have been a staple for scammers for decades now, and include fake emails or websites that are geared toward stealing your private info.

How to Avoid It: The IRS will never initiate contact with you via email, even if the email claims you owe a tax bill or need to provide information to process your return. Ignore the email, flag it as junk, or report it to the IRS.

2. Phone Scams

The Scam: A phony call from the IRS can be scary. According to the IRS, these phone calls have been on the rise in recent years—and threaten taxpayers with arrest, deportation, and other drastic penalties.

How to Avoid It: The IRS will not call you, so you shouldn’t respond with your personal info. The best way to thwart a phone scammer is to hang up and call the IRS directly. Let them know what you experienced and they’ll confirm the first call wasn’t legitimate.

3. Identity Theft

The Scam: Identity theft can take many forms, including taxes. Scammers make all sorts of attempts to secure your personal information, like your social security number, bank account info, and mailing address—then use them to get their hands on your tax refund.

How to Avoid It: At the risk of sounding like a broken record, just be extra careful about whom you trust with your personal information. The fewer places you share it, the less likely you are to find out someone stole your refund.

4. Return Preparer Fraud

The Scam: Most tax preparers are nothing short of legitimate! But not everyone is, and the unscrupulous ones bank on their clients trust to scam them.

How to Avoid It: Before you hire any tax preparer, look them up online. It’s relatively easy to differentiate between a legitimate business and a shady one, so err on the side of caution.

5. Inflated Refund Claims

The Scam: This is another tax preparer-related scam, which targets people by promising giant refunds. Usually these preparers will have clients sign a blank return or charge fees based on a percentage of the refund.

How to Avoid It: Research, research, research. A tax preparer who is advertising via flyers or exclusively through word-of-mouth is probably not legitimate. If you don’t see a strong track record online, beware.

6. Falsifying Income to Claim Credits

The Scam: Some unscrupulous tax professionals will suggest you falsely inflate (or deflate) your income to qualify for specific tax credits. If they’re asking you to be dishonest, they aren’t trustworthy.

How to Avoid It: Always file an honest claim. If you stay true to your financial situation, you won’t run the risk of falling into someone else’s fraudulent plans.

7. Falsely Padding Deductions on Returns

The Scam: Similar to falsifying income to claim credits, you may be asked to inflate your deductions or expenses to pad your deductions.

How to Avoid It: File an honest and accurate tax return and you’ll avoid falling into anyone else’s fraud—and committing tax fraud, yourself.

8. Fake Charities

The Scam: Charitable giving is tax deductible and just feels good! But scammers know this, and may try to take advantage of that by creating dummy accounts or fake charities with names that sound similar to real ones.

How to Avoid It: Take the extra time to research any nonprofit before you donate. Be sure to double-check spelling and ensure your money is going exactly where you intend.

9. Excessive Claims for Business Credits

The Scam: We won’t belabor the point. However, the IRS specifically recommends taxpayers avoid improperly claiming the fuel tax credit and research credit—because most people don’t actually qualify for them.

How to Avoid It: File an honest and accurate tax return. If your business is working with a tax preparer, you should talk about the credits they recommend and ask questions.

10. Offshore Tax Avoidance

The Scam: Some taxpayers think the best way to protect their money is by hiding it offshore. But the IRS is wise to this strategy and is ready to enforce it.

How to Avoid It: Offshore tax avoidance is a bad look. Ensure you’re caught up on your tax-filing responsibilities.

11. Frivolous Tax Arguments

The Scam: Some scammers may try to convince you that by making some outlandish claim—such as sovereignty or religious dissent—you can avoid paying taxes. But the penalty for filing a frivolous tax return is $5,000.

How to Avoid It: Don’t waste time for yourself or the IRS, and file the appropriate tax return for your situation.

12. Abusive Tax Shelters

The Scam: Some fraudsters will try to sell you on complex tax structures, which might include things like trusts or “syndicated conservation easements,” but they all boil down to the claim that you won’t need to pay taxes.

How to Avoid It: Always seek an independent opinion when you’re offered a complex product—whether that may be a financial advisor or another tax professional. If it sounds too good to be true, it is.

Stay Safe from the Tax Scams of 2019!

Whew! That was quite the marathon, wasn’t it?

We’re glad you took a few minutes to get caught up on the biggest tax scams of 2019. Most of these will remain prevalent year after year, and the best thing you can do for your financial safety—and your relationship with the IRS—is to maintain awareness and always be careful about where you put your trust and your information.

Scammers may be smart, but we know you’re smarter. Be a pro at outwitting the cons, and protect your financial future for many years to com