Scam Scout: Four tax scams and how to avoid them

By Faye Scott, DIVA Contributor

Just sit through fifteen minutes of television and you know it's tax season . All the tax establishments are running commercials, some more interesting than others (rapping and dramtic story lines) . Beware though, every deal advertised may seem like the quickest way to get the biggest refund but beware of scams.

First time filer, and local Memphian Bianca Jenkins wishes she would have used another tax service. She chose Super Fast Taxes on Danny Thomas because it was in walking distance to her home. Jenkins reported to have lost $1800 at the establishment. After an IRS investigation, her refund was found to be deposited in the personal account of the owner.

Unfortunately scams like this are common all over the nation. Here are a few scams and how to avoid them. Keep your hard earned money in you account and not someone elses

1. Phishing
A tax phishing scam happens when a scammer tries to convince someone they are owed a tax refund but they have to provide personal information to prove their identity before the refund can be claimed. Providing personal information opens the door for identity theft. You can prevent this by being wary of emails supposedly sent by the IRS. The IRS never sends out unsolicited emails to individuals, all matters of business are handled by mail or over the phone.

2. Tax Return Preparation Fraud
There are dishonest tax preparers who can damage you financially. There have been reports of preparers keeping information from clients' tax returns or charging very high fees for getting you a very high tax return. To protect yourself you should realize that not all tax preparers are honest and you should find someone with a good reputation to help you. The IRS will begin placing regulations on tax preparers in the future, which will hopefully help this problem.

3. "Frivolous Arguments to Avoid Paying Owed Taxes"
There are "frivolous schemes" that encourage people to not pay the taxes they owe. In this type of scheme, the scammer uses several arguments convinces the consumer that they don't have to pay, such as:"paying taxes is voluntary" and filing 0 return means you won't have to pay any taxes and "the first amendment allows individuals to refuse to pay taxes on religious or moral grounds." You have to remember that these arguments are false and you still have to pay your taxes, no matter how convincing the scammer is.

4. "False Forms for Bigger Returns"
In some scams, an individual will file false information on their tax return in order to claim a refund they are not owed. In a bigger scheme, a tax preparer or scammer helps a tax payer file misleading information for a larger return (in exchange for a percentage of that return).

Always report everything 100 percent accurately on your tax return. IRS computers are becoming more and more sophisticated each year. They have a program that can compare your reported earnings against what your employer or contractor reported. The IRS also runs statistical analysis on your return to check for red flags.