The Taxman Cometh

Well friends, it is that time of year.  And I want to keep it light.  But I just couldn’t resist sharing the “Dirty Dozen” list of tax scams that the Internal Revenue Service recently posted.  I will share a few of these with you, but to read the full article click here.

It’s sad but true: tax fraud through the use of identity theft tops this year’s Dirty Dozen list.  In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.  It’s called “phishing”—and no, this isn’t “fishing” misspelled.  According to the IRS, it is a scam typically carried out with the help of unsolicited email or a fake website.  The IRS will not initiate contact with taxpayers by email to request personal or financial information.

Tax professionals going awry?  Say it isn’t so.  But alas, it is (according the IRS).  They advise us to choose carefully when hiring an individual or firm to prepare our return. They remind us to use only preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs). But mostly, keep in mind that you are legally responsible for what’s on your tax return, even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

“Free money” from the IRS & tax scams involving social security also tops the list. No such thing as a free lunch, or money, that is.  Flyers and advertisements for free money from the IRS have been appearing suggesting that the taxpayer can file a tax return with little or no documentation.  These schemes promise refunds to people who have little or no income and normally don’t have a tax-filing requirement, and they’re often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Now don’t forget the misuse of Trusts.  For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable 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 of avoiding income tax liability and hiding assets from creditors, including the IRS.

With that said, I hope tax season wasn’t too much of a burden.  But, if it is and you would like some ways to legally reduce your taxes with wealth management, feel free to reach out to a member of our team at Berson Money Management. 

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Investment advisory services are offered through Berson Money Management, a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted. The contents of the blog are not to be copied, quoted, excerpted or distributed without express written permission of the firm. Any other use beyond its author's intent, distribution or copying of the contents of this e‐mail is strictly prohibited. Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only.