IRS 2010 "Dirty Dozen" Tax Scams

The Internal Revenue Service has issued its 2010 “dirty dozen” list of tax scams, including schemes involving return preparer fraud, hiding income offshore and phishing.

“Taxpayers should be wary of anyone peddling scams that seem too good to be true," according to IRS Commissioner Doug Shulman. Tax schemes are illegal and can lead to imprisonment and fines for both scam artists and taxpayers. Taxpayers pulled into these schemes must repay unpaid taxes plus interest and penalties. The IRS pursues and shuts down promoters of these and numerous other scams.

The 2010 list:
Return Preparer Fraud - Dishonest return preparers derive financial gain by skimming a portion of their clients’ refunds, charging inflated fees for return preparation services and attracting new clients by promising refunds that are too good to be true.

Hiding Income Offshore - Taxpayers who try to avoid or evade U.S. income tax by hiding income in offshore banks or brokerage accounts will be aggressively pursued by the IRS.

Phishing - Phishing is a tactic used by scam artists to trick unsuspecting victims into revealing personal or financial information online. The IRS does not contact taxpayers via e-mail or phone.

Filing False or Misleading Forms - The IRS is seeing various instances where scam artists file false or misleading returns to claim refunds to which they are not entitled.

Nontaxable Social Security Benefits with Exaggerated Withholding Credit - Taxpayers reporting nontaxable Social Security Benefits with excessive withholding on their return may receive a $5,000 penalty for the false filing.

Abuse of Charitable Organizations and Deductions - The IRS continues to observe the misuse of tax-exempt organizations, including arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets or income from donated property, overvalued donations, and organizations promising that the donor can repurchase the items later at a price set by the donor.

Frivolous Arguments - Promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. If a scheme seems too good to be true, it probably is.

Abusive Retirement Plans - The IRS continues to find abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers use to avoid the limits on contributions to IRAs, as well as transactions that are not properly reported as early distributions.

Disguised Corporate Ownership - Corporations and other entities formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity by means such as improperly using a third party to request an employer identification number.

Zero Wages - Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Taxpayers participating in any of the variations of this scheme may result in a $5,000 penalty.

Misuse of Trusts - While there are many legitimate, valid uses of trusts in tax and estate planning, some promoted transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means to avoid income tax liability and to hide assets from creditors, including the IRS.

Fuel Tax Credit Scams - The IRS receives claims for the fuel tax credit that are excessive. Some taxpayers may be eligible for the fuel tax credit, but other individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit potentially subjects those who improperly claim the credit to a $5,000 penalty.


Suspected tax fraud can be reported to the IRS using Form 3949-A, Information Referral. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential.

Whistleblowers also may provide allegations of fraud to the IRS and may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

SBA - Google Partnership

The U.S. Small Business Administration (SBA) and Google have partnered to provide "Tools for Online Success," a collection of online resources and training to help small business owners use technology to grow their businesses. The site features tutorials, video testimonials, and tips from savvy small business people who have leveraged the web to become more efficient, more cost-effective, and more successful.

The videos are brief and packed with good information for giving your business a better online presence. Visit their website to view the videos.

QuickBooks Sunsetting 2007 Versions

As of May 31, 2010, Intuit will discontinue services and direct support for QuickBooks version 2007, Enterprise version 7.0 and Point of Sale version 6.0. The current Intuit policy is to support the current year version (2010) and the two prior year versions (2009, 2008).

If you are using any 2007 version of QuickBooks, you will no longer be able to call Intuit for support issues. Some features will no longer work, such as emailing invoices, payroll and downloading banking and credit card transactions.


Please visit our website or your local office supply store to purchase an upgraded version of any of the sunsetting QuickBooks versions.

6 Ways to Save by Going Green

Keeping with my theme of Green Living for 2010, the following suggestions are from an article published in the March 2010 issue of U.S. News & World Report.


Transportation - You don't need a hybrid car for greener transportation. Getting regular tune-ups, keeping tires properly inflated and avoiding idling increases fuel efficiency and saves gas. Other options include public transportation, cycling and walking.

Home Heating & Cooling - When you're going out, turn your thermostat up a few degrees in warm weather and down a few degrees in cool weather to lower your energy usage.

Buy None, Get One Free - There are several websites that promote trading items you no longer want or use. Freecycle lists items by category; Zwaggle is specifically for parents; on Goozex, video gamers can swap games.

Get Paid to Recycle - Old phones, printers and monitors are used by companies that refurbish, resell and recycle them. Gazelle, EcoNew and BuyMyTronics are all sites that will buy or "responsibly recycle" your electronic items.

Cut Down on Trash - Most disposable goods - like tissues, napkins, plastic water bottles and plastic sandwich bags - have durable alternatives - like handkerchiefs, cloth napkins, reusable water bottles and reusable plastic containers.

Conserve Water - Installing a low-flow shower head and running your dishwasher and washer only when they are full will reduce your water consumption and save money.

Working together, we can make a difference :)


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