Have you started filing your taxes yet?
In the next few weeks, there will be social security numbers, expense lists, pay stubs and more being transferred, mailed, and analyzed. All of this information is a goldmine for individuals who want to commit identity theft or fraud schemes.
As secure as your data and information may be, identity theft comes in many forms, and rears its ugly head every year during tax season. Taxpayers are reminded each year by the IRS that information should be transferred wisely and that fraudsters are out there looking to grab a hold of someone else’s returns.
Some of the most common taxpayer-related fraud schemes include:
- Filing a Tax Return Using Someone Else’s Social Security Number: This is pretty straightforward. If someone is using another person’s SSN, they can get the other person’s return. Fraudsters can obtain this information through a variety of schemes, including phishing emails or telephone scams.
- Return Preparer Fraud: In this scheme, a fraudster will pose, or even legitimately work, as a tax return preparer. Their clients give them the necessary information to file their taxes, and the preparer uses that information and swindles some of the income that is returned to the client.
- Hiding Offshore Income: Although big billionaires or celebrities typically commit this crime, anyone can hide income in order to prevent it from being taxed.
- Impersonating a Charitable Organization: Many individuals turn to charity before (or after) tax season. Donations are considered tax write-offs, and after returns are sent back, it’s normal to feel like giving back. However, there are also false charities out there that illegally solicit donations and take people’s money.
- Misuse of Trusts: Trusts are a legitimate way to transfer your money into a safe account. They are often used while planning an estate or to keep a business’s assets separate from an individual. Sadly, trusts can also be used for fraudulent purposes, which will ultimately get the trustee in big trouble with the law.
- Falsely Using or Omitting Wages, Listing Expenses, or Exemptions: Filing your tax return is all a numbers game, but if you submit false numbers and information in order to earn a bigger return or pay less taxes, you may be accused of taxpayer fraud.
Don’t Let an Honest Mistake Put You behind Bars
Let’s look at this last one. Remember the first time you tried to file your taxes by yourself? You probably had to ask a lot of questions to avoid making mistake. Even then, you might have felt like you were tiptoeing through the forms to keep all of your answers accurate. The last “tax scheme,” while being used to commit fraud, could also be committed due to a taxpayer’s negligence, misinformation, or ignorance.
In comparison with businesses, individuals commit a majority of tax fraud schemes. Because of this, the IRS is always on the lookout for individuals who commit taxpayer fraud, and an honest mistake could be picked up by the IRS and lead to criminal charges.
Taxpayer fraud is a felony crime that can put you behind bars for several years in addition to costing you hundreds of thousands of dollars in fines and restitution if you are convicted. Don’t pay the price if you don’t have to, though. Contact an experienced Colorado fraud lawyer as soon as possible to start building your defense strategy so that you can protect your rights and your future.
About the Author:
Kimberly Diego is a criminal defense attorney in Denver practicing at The Law Office of Kimberly Diego. She obtained her undergraduate degree from Georgetown University and her law degree at the University of Colorado. She was named one of Super Lawyers’ “Rising Stars of 2012” and “Top 100 Trial Lawyers in Colorado” for 2012 and 2013 by The National Trial Lawyers. Both honors are limited to a small percentage of practicing attorneys in each state. She has also been recognized for her work in domestic violence cases.
