For the 12th year in a row, identity theft complaints topped the FTC’s list of top consumer complaints received by the agency. The FTC released the list of complaints entered into its Consumer Sentinel database over the prior year on February 28.

Of more than 1.8 million complaints filed in 2011, 279,156 (15 percent) were identity theft complaints. Nearly 25 percent of the identity theft complaints concerned tax-related or wage-related fraud.

The next nine complaint categories were: debt collection (10 percent); prizes, sweepstakes, and lotteries (6 percent); shop-at-home and catalog sales (5 percent); banks and lenders (5 percent); Internet services (5 percent); auto related complaints (4 percent); imposter scams (4 percent); telephone and mobile services (4 percent); and advance-fee loans and credit protection/repair (3 percent).

The FTC’s Consumer Sentinel Network report appears here.

1. Identity Theft
2. Phishing
3. Tax Preparer Fraud
4. Hiding Income Offshore
5. Free Money from the IRS
6. False or Inflated Income or Expenses
7. False Form 1099 Refund Claims]
8. Frivolous Arguments
9. Zero Wage Claims
10. Abusing Charitable Deductions
11. Disguised Corporate Ownership
12. Misusing Trusts

Letas explore in more detail the top three:

Topping the list again is IDENTITY THEFT

Identity theft is the biggest problem in the electronic age. The internet and its electronic community have rushed forward, ahead of all methods of control, and create a aWild Westa atmosphere. The thing about the United States that makes us great is our respect for the rule of law. However, that is not true for the Internet. The controls, privacy protections, and rule of law are just not moving as fast as the Internet community is moving forward. False tax returns are one common way thieves take advantage of both the government and the victims. The IRS has stepped up efforts to control Identity Theft tax rip offs but because ID thieves use real social security numbers and easy to find personal information (see Face Book, Google +, and Twitter) it is a hard job. If you get a notice that more than one tax return was filed in your name, make sure you report it immediately. The IRS has create a significant system to catch ID theft on tax returns and last year they saved over $1,400,000,000 in taxpayer refunds, but the thieves are smart and the schemes are getting more and more complex. If you are suspect that your ID was stolen you need to contact the IRS ID Protection Unit at www.IRS.gov/identitytheft.

Fishing! No, wrong, sorry: Phishing!

Phishing is when ID thieves lure victims into giving valuable identity information to the ID thief. This is typically carried out using email requests or setting up websites that look and feel like a legitimate site. Because there is really no difference between a aReal Websitea and a aFraudulent Websitea it is easy to mistake them. Once the ID thief has your information, you are likely to get ripped off.

Here is a KEY POINT with respect to the IRS. The IRS does not use email to collect, or even request personal information from taxpayers. They certainly do not use FaceBook, Twitter or any other social media to contact or collect information. Do not trust an email, FaceBook contact, or any electronic contact from the IRS. If you do get an email from the IRS, or even the EFTPS a which is the Electronic Federal Tax Payment System, that looks legitimate but was unsolicited, you need to report that to the IRS through their specially designed Phishing unit at phishing@irs.gov.

Preparer Fraud

Almost nobody understands the tax code. Certainly those simple to fill in return forms are a nightmare to get right. So, many of us use accountants, CPA’s, or tax attorneys to help us at the end of the tax year. But the expense of paying for a professional is quite burdensome for most people, so they either do it themselves, or look for a more economical option. The aEconomicala route has created a space in the market for fraudulent tax preparers. These thieves will take money out of their clientsa refund, or charge unfair fees to prepare the return. They promote their service with unrealistic promises of guaranteed, overinflated refunds. Further, these thieves then have access to your personal information and can steal from you twice!

Here are some good standards to look for when choosing a Tax Preparer:

• Every paid atax preparera must get a aPreparer Tax Identification Numbera (PTIN) from the IRS. This number must be placed on every prepared tax return. If your tax preparer does not have a PTIN then you should not sign the return.
• Every Preparer should give you a free copy of the return. If you are not given a copy of your tax return there may be a problem. If your Preparer is promising to get you an incredible or unusual amount on your return, I would be very wary.
• Tax preparers should be working on a set fee. They should not be on a contingency or commission basis and you should never have to pay the preparer from your refund.
• Finally, never allow a preparer to convince you to put false information on a tax return. That means you can never put in false income or false credits. If you do you are subjecting yourself to double jeopardy, because the preparer will have you and the IRS will also not be happy with your false information.

As a firm that concentrates on IRS Tax Fraud including Qui Tam and Whistleblower Issues we want you to beware of tax season scams! If you believe you are the victim of a scam, you need to report it as soon as possible. The IRS Criminal Division and the Dept. of Justice take online, telephone and in person scams seriously. If you have questions or have information about a tax fraud where more than $2,000,000 is at stake, call our office to report the fraud. Remember, when reporting tax fraud you must be first in line, you must have convincing information, and you must secure your claim to get paid the aRelatoras Sharea. Call our office for a free consultation: LaBovick Law Group at 561-625-8400, or email info@labovick.com.