Tax Prophet Newsletter March, 2008

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The Tax Prophet Newsletter

Issue # 59 March, 2008

REDUCE TAXES! CHECK OUT THE TAX PROPHET'S Action Guides In This Issue: Introduction Phishing Tax Rebates Hiding Income Frivolous Arguments Rewards Conclusion		2008 Dirty Dozen Tax Schemes Introduction The Web tops the 2008 annual IRS list of bogus tax schemes. Internet-based efforts to steal financial information from taxpayers by IRS impostors, commonly called "phishing," leads the group, followed by web-based rebate scams. Frivolous legal arguments and hiding money, either off-shore, perennial favorites, are also high on the list.

Phishing		Phishing involves phony emails by criminals out to steal your personal and financial information so they can loot your accounts. IRS has received more than 33,000 complaints about these scam e-mails, involving more than 15,000 different schemes. Note: IRS never uses e-mail to contact taxpayers.
Tax Rebates		A variation of the phishing scheme involves the tax rebate program recently passed by Congress. Hucksters send emails claiming that to obtain rebates, you need to send them your bank account information. False - to obtain the rebate, just file your 2007 tax returns.
Hiding Income		Taxpayers believing they can hide income off-shore and avoid detection remains a major IRS headache. These efforts include use of offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The law requires any that any taxpayer with a financial interest in, or signature authority over, a foreign bank account containing at least $10,000 during the year must report this information to the U.S. Treasury on form F 90-22.1 by June 30 (there are no extensions!) or face up to a $10,000 fine.
Frivolous Arguments		The meritless tax protester arguments (those espoused by Wesley Snipes come to mind), such as wages are not income, the tax law is unconstitutional, or that only foreign individuals are liable for income taxes, continue to clog the tax system, despite criminal convictions and long jail sentences meted out to many tax-scam promoters. This is a losers game: Even if a tax protester is not criminally convicted, he winds up owing the full amount of the tax, plus penalties and interest -- and they are usually rendered penniless.
Rewards		IRS may pay a bounty for turning in tax cheats. Whistleblowers may be eligible for a reward by filing Form 211, and following the procedures outlined in IRS Notice 2008-4. Those acting out of noble principle or spite, but are not interested in a reward, may report suspected tax fraud to IRS using IRS Form 3949-A.
Conclusion		By publishing an annual list of tax scams, IRS is banking on the public to turn in tax cheats for reward money. The dirty dozen scam list is supposed to deter taxpayers from engaging in tax fraud, but also warns taxpayers about the Internet-based scams. The lesson is simple: Never, ever provide financial or personal information over the Internet to anyone posing as an IRS agent.

All contents copyright Š 2008 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet Ž is a registered trademark of Robert L. Sommers.