Tax season also brings scams

Kevin Rademacher

Friday, April 2, 2004 | 11:20 a.m.

Taxpayers with questions or concerns are urged to contact the IRS. The IRS takes questions at 1-800-829-1040. A tax fraud hotline has been established at 1-800-829-0433. Additional information is available at www.irs.gov.

Internal Revenue Service statistics show that 25 percent of all the tax returns filed each year are completed in the final 14 days leading up to April 15.

That means there's a lot of work to be done by Nevada taxpayers in the next two weeks, and the IRS is on a publicity drive to make sure all that work is done right.

Mercedes Manzur, a Las Vegas-based special agent with the criminal investigation unit of the IRS, said the service is trying to limit the occurrence of a list of scams known as the "Dirty Dozen."

Each of those scams involves the promise of large returns, but Manzur urges caution.

"If it sounds too good to be true, it probably is," she said.

The Dirty Dozen includes the misuse of trusts and offshore transactions designed to hide income as well as a scheme designed to manipulate the Americans With Disabilities Act to deduct expenses.

Other more complex schemes include a so-called claim of right doctrine, "corporate sole" plots, employment tax evasion and other "frivolous arguments" designed to free individuals from tax burdens. In each case, the IRS said they are based on an incorrect interpretation of the tax code.

Emerging tax scams also include identity theft in which criminals steal financial information and make false refund claims. Other scams include claims of reparations for blacks and deductions built around improper home-based businesses.

The IRS is focusing on tax preparers that are promoting such fraud.

Manzur pointed to a recent case involving Las Vegas tax preparer Paul Vance. In January, he was sentenced to 18 months in jail and ordered to pay restitution of $120,224 for tax fraud. Vance, who operated Advanced Accounting Systems, was misrepresenting his clients' income on their returns.

Manzur said taxpayers should be cautious of preparers who promise high rates of return or offer to be paid with a percentage of the return. She added that consumers concerned about a preparer should not file their return until they confirm the advice they have received by calling the IRS at 1-800-829-1040.

While consumers misled by a preparer are not likely to be prosecuted, Manzur said they will still be liable for the unpaid tax and interest.

Consumers also are urged to report suspicious preparers by calling the tax fraud hotline at 1-800-829-0433. Additional information is available online at www.irs.gov.

"When consumers help us in this, we ultimately lower the tax liability for everyone if we can keep it honest," Manzur said.