LOS ANGELES -- Identity theft, hiding income offshore and inflating expenses are among the frauds that commonly pop out during tax preparation season, the Internal Revenue Service warns.
The federal agency, which administers tax collection, has released its annual list of "dirty dozen" tax scams. Such scams often become more prevalent as the tax season comes to a head; this year's tax deadline is April 17.
The ranking is designed to protect taxpayers from the unscrupulous as well as ensure the government gets the funds it needs to operate.
The top scam involves identity theft. In such cases, criminals use a taxpayer's identity information to file a tax return and claim a fraudulent refund. The IRS said it blocked $1.4 billion from going to the wrong person last year. In January, the IRS announced the results of a national crackdown on suspected identity theft, with 105 people in 23 states targeted, the agency said.
Related to identity theft, but a second category of fraud, is phishing. These cases generally use unsolicited emails or websites to gain personal information from unsuspecting taxpayers. The information is then used to file false returns and get refunds, much as in identity theft cases.
As for hiding income offshore, it is generally legal for Americans to keep money abroad, but the funds must be declared and taxes paid.
Other scams in the so-called dirty dozen include: fraud by return preparers; false or inflated income and expenses; and abuse of charitable organizations and deductions.
