2006 List of Tax Scams Released by IRS
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
IRS Releases 2006 List of Tax Scams
Overview
Each year, the IRS publishes a list of prevalent tax scams to inform taxpayers about unviable strategies and to clarify that these methods will not be accepted.
Key Scams of 2006
In 2006, the IRS highlighted several dubious tax schemes that can lead to audits and legal actions against both taxpayers and promoters. Here are the main scams to watch out for:
1. Zero Wages Scam
- This misleading tactic involves filing a tax return showing no wages and disputing any W-2 or 1099 wage reports. The aim is to avoid paying taxes by creating confusion within the IRS. Ultimately, these zero-income tax returns will be rejected.
2. Form 843 Tax Abatement
- This innovative scheme is often used by those who haven't filed taxes for years. The strategy involves contesting the IRS’s assessment by claiming the calculated taxes are incorrect. However, the IRS rejects this approach.
3. Identity Theft and Phishing
- Identity thieves pose as IRS representatives to extract personal information from taxpayers through emails. Remember, the IRS never contacts taxpayers via email. If in doubt, contact the IRS at 800-829-1040 to verify any issues.
4. Credit Repair Companies
- Some companies claim to fix credit but charge steep fees while providing minimal assistance. The IRS is revoking tax-exempt status from many deceptive credit repair firms.
5. Offshore Strategies
- The IRS closely monitors offshore tax schemes. In 2005, numerous individuals were prosecuted for promoting these scams. If considering offshore financial options, consult a qualified tax professional and attorney to avoid illegal actions.
Conclusion
Understanding the difference between legal tax avoidance and illegal tax evasion is crucial. Always seek guidance from a tax professional who can advocate for your tax strategies with the IRS.
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