Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit.
WASHINGTON — Avoid the temptation to falsely inflate deductions or expenses on tax returns, the IRS warned today in its 2017 “Dirty Dozen” list of tax scams. Doing so may result in paying less than is owed or receiving a larger refund than is due.
The majority of taxpayers file honest and accurate tax returns each year. However, each year some taxpayers “fudge” their information. This is why falsely claiming deductions, expenses or credits on tax returns remains on the “Dirty Dozen” list of tax scams.
Taxpayers should think twice before overstating deductions such as charitable contributions, padding business expenses or including credits that they are not entitled to receive – like the Earned Income Tax Credit or Child Tax Credit.
Each year, increasingly efficient automated systems generate most IRS audits. The IRS can normally audit returns filed within the last three years. Additional years can be added if substantial errors are identified or fraud is suspected. Although there is no way to entirely avoid an audit, preparing an accurate tax return is a taxpayer’s best defense.
Significant penalties may apply for taxpayers who file incorrect returns including:
Taxpayers may be subject to criminal prosecution and be brought to trial for actions such as:
Criminal prosecution could lead to additional penalties and even prison time.
File an Accurate Return
Using tax software is one way for taxpayers to ensure they file an accurate return and claim only the tax benefits they’re eligible to receive. Question and answer formats lead taxpayers through each section of the tax return. IRS Free File is an option for taxpayers to use software to prepare and e-file their tax returns for free.
Community-based volunteers at locations around the country also provide free face-to-face tax assistance to qualifying taxpayers. Volunteers help taxpayers file taxes correctly, claiming only the credits and deductions they’re entitled to by law.
Taxpayers should know that they are legally responsible for what is on their tax return, even if it is prepared by someone else. The IRS offers important tips for choosing a tax preparer.
More information about IRS audits, the balance due collection process and possible civil and criminal penalties for noncompliance is available at the IRS website.
Taxpayers can also learn more about the Taxpayer Bill of Rights at IRS.gov. This is a set of fundamental rights each taxpayer should be aware of when dealing with the IRS, including when the IRS audits a tax return.
To find tips about choosing a return preparer, better understand the differences in credentials and qualifications, research the IRS preparer directory, and learn how to submit a complaint regarding a tax return preparer, visit www.irs.gov/chooseataxpro.