Opens in a new tab

Beware the Dirty Dozen tax scams

March 22, 2010

dirty_dozen_dvdCriminals work 365 days a year, but the the annual U.S. income tax filing season is prime scam time.

For the last few years, the IRS has issued an annual list of the 12 most prevalent scams. Dubbed "The Dirty Dozen," the list doesn't change dramatically from year to year, which just proves how successful, at least for the perpetrators, some of these long-standing cons are.

Regular repeats are phishing, illegal offshore accounts and return preparer fraud.

Here's the 2010 list:

  1. Return Preparer Fraud
  2. Hiding Offshore Income
  3. Phishing
  4. Filing False or Misleading Forms
  5. Nontaxable Social Security Benefits with Exaggerated Withholding Credit
  6. Abuse of Charitable Organizations and Deductions
  7. Frivolous Arguments
  8. Abusive Retirement Plans
  9. Disguised Corporate Ownership
  10. Zero Wages
  11. Misuse of Trusts
  12. Fuel Tax Credit Scams

Eleven of the cons are returning Dirty Dozen members. The new scheme? Number five.

In this scam, a taxpayer inflates withholding that is reported against nontaxable Social Security earnings in order to get a, or a larger, refund.

Claiming overpaid Social Security taxes is legitimate. This happens when, for example, you have multiple jobs and the 6.2 percent payroll tax is withheld from your wages on earnings subject to that maximum taxable wage base. In 2009 that income level was $106,800; it's the same in 2010.

In these cases, your multiple employers each collect the withholding, meaning your total wages upon which you paid Social Security taxes could be more than the limit so you paid more that the maximum of $6,621.60 in payroll taxes. You're allowed to collect that overpayment as a credit when you file your tax return.

But in the case of the scam, the IRS says both the income and withholding amounts are sometimes incorrect. 

A high price to pay: So keep your eyes open for these. If you're duped, when the IRS finds the improper information on your return you could face some substantial fines.

In the Social Security/withholding scam, for example, it could cost you $5,000.

You also will end up owing the back taxes you thought you were avoiding, as well as penalties and interest on the unpaid bill.

Old cons never die: And don't rely solely on this list. Just because a scam didn't make the Dirty Dozen cut this year, that doesn't mean criminals aren't out there using it.

Take, for example, the one that the Social Security scam bumped this year, False Claims for Refund and Requests for Abatement. This scam uses an official IRS form that is legitimately used by taxpayers who haven't filed a return, but should have, and the IRS filed one for them using its Substitute for Return program.

This previously was a very common scam, thereby earning it a place on the 2009 list. And even though this year it fell out of the top 12, you can be sure that it's still around.

Report and collect: If you run across any of the current Dirty Dozen or any other tax con, let the IRS know by filing Form 3949-A.

You also might be eligible for a reward for turning in suspected tax fraud. In this case, you'll need to file Form 211 with the IRS Whistleblower Office.

And remember, that old saying about things sounding too good to be true not being true is particularly good advice at tax time.

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
How to avoid being haunted by ghost tax return preparers

October 28, 2026

Some ghosts this Halloween are cool trick-or-treaters. But when it comes to taxes, beware of…

Read More
TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment