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Tax Scams: What You Must Know About the IRS "Dirty Dozen"

Tax season is seen as a nuisance at best for many Americans, but others see tax time as an opportunity to make a quick buck. These scammers, criminals, and miscreants do their best to part you from your money during tax season. Fortunately, the IRS is here to help. It publishes an annual "Dirty Dozen" list to advise Americans about some of the most frequently used tax scams. Be careful this tax season by educating yourself about some of the most common scams and how to avoid them.

Identity theft
This is the top threat to American taxpayers. In this tax scam, thieves acquire a victim's personal information -- such as a Social Security number or credit card information -- and use it for their own purposes. Many identity thieves steal personal information of people entitled to a tax refund so they can file taxes in the name of the victim and claim the refund for themselves.

Telephone scams
These have become an increasingly large problem for Americans, partly because there are so many variations. In the tax scam version, someone calls the victim and claims to be an IRS agent. He or she might say that the victim owes money or is entitled to a refund. This person then asks for personal information. Some scammers threaten victims, telling them that they may go to jail or have their driver's license revoked. In the most complex scams, the scammer's partner makes a follow-up call claiming to be a representative of the police department, DMV, or other agency.

If you get a call from someone who claims to be from the IRS, hang up and call the IRS at (800)829-1040. If there is an issue regarding your tax situation, an IRS employee can help you find out what it is and advise you on what to do next. Remember, it is not safe to give out sensitive information over the phone.

Phishing
Phishing is an Internet-based tax scam in which criminals send emails or set up websites that look very similar to those of legitimate organizations. Scammers send emails to potential victims instructing them to go to a certain website or to reply with a Social Security number, username and password, or similar information. Anyone who sends you an email claiming to be the IRS is trying to trick you. The IRS does not initiate contact with taxpayers through email. If you receive an email from someone claiming to be the IRS, forward it to phishing@irs.gov.

Impersonating charitable organizations
These unscrupulous scammers inevitably surface after major natural disasters. While many legitimate charities such as the Red Cross seek donations during these periods, criminals with fake charities also begin soliciting money from unsuspecting philanthropists. Fake charities typically use names that sound similar to legitimate ones, so it can be confusing for people who just want to help out. If you're planning to donate to a new charity, use the IRS' Exempt Organizations Select Check to find out whether the organization is actually registered as a public charity with the IRS.

These are just some of the most common tax scams out there today. The IRS has a full list of its "Dirty Dozen" scams available on its website for those who may want to learn more about the popular scams out there. Stay safe this tax season. Don't give out information over the phone or in email. Don't give money to unfamiliar organizations. Contact the IRS directly if you're unsure about any phone calls or emails that you have received from someone who says they're from the government or another authority.

Is Uncle Sam about to claim 40% of your hard-earned assets? 
Thanks to a 2013 law called the American Taxpayer Relief Act, he can -- and will -- if you aren't properly prepared.

Fortunately, The Motley Fool recently uncovered an arsenal of little-known loopholes to protect yourself from ATRA and help keep the taxman at bay when he inevitably comes calling. We reveal them all in a brand-new special report. Simply click the link below for instant, 100% FREE access. Protect your hard-earned wealth from Uncle Sam.


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