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IRS warns of "Dirty Dozen Tax Scams" for 2011

The Internal Revenue Service (IRS) recently highlighted some the top abusive tax scams for 2011. Activities such as, hiding income in offshore accounts, identity theft, return preparer fraud and filing false or misleading tax returns forms the Service's the annual list of "dirty dozen" tax scams in 2011.

"The Dirty Dozen represents the worst of the worst tax scams," IRS Commissioner Doug Shulman said. "Don't fall prey to these tax scams. They may look tempting, but these fraudulent deals end up hurting people who participate in them."

The Dirty Dozen

  • Hiding income offshore
  • Filing fraudulent returns involving identity theft and phishing
  • Tax return preparers Fraud
  • Filing false or misleading forms
  • Frivolous arguments
  • Nontaxable Social Security benefits with excessive withholding
  • Abuse of Charitable Organizations and Deductions
  • Abusing retirement plan
  • Disguising corporate ownership
  • Zero wage or phony wages
  • Misuse of trusts
  • Fuel-tax credit scams

These tax fraud schemes can all lead to federal prosecution, and those charged can face large fines and imprisonment. The Justice Department prosecutes these charges for IRS.

Even if you are an innocent taxpayer, who has inadvertently became involved with any of these activities, if you avoid federal prosecution, you still must repay all taxes due plus interest and penalties.

Serious Charges with Serious Penalties

Federal tax evasion and tax fraud are serious felonies. For instance, a taxpayer using frivolous arguments could face criminal prosecution for attempting to evade taxes, which is a felony, with a fine of up to $250,000 and imprisonment for up to 5 years.

If you have received a letter from the IRS raising questions regarding any of these activities, consulting with an attorney experienced with handling criminal tax charges is a good first step. An attorney can assess the charges and recommend strategies to resolve the charge.

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