Wednesday, March 26, 2008

Quick Takes: Tax Season Scams, Rogue Traders

Once again, April 15th is showing up quickly. Many folks are busy getting their taxes filed. This is also the season where all the scammers show up once again. A recent article (Don't Fall for IRS-Related Scams) discusses four of the major scams making their rounds this season.

The rebate phone call, tax refund email, audit email, and check verification phone call scams are simply re-packaged traditional scams taking advantage of modern technology using the tax season as a vehicle. Unfortunately a large number of consumers are falling for these frauds.

Tax payers should also watch out for all the fees associated with refund anticipation loans or deals that put your refund on a debit card. All these type of offers from tax preparation services carry fees that would make most loan sharks blush… or turn green with envy.

There are also traditional frauds circulating on how to avoid taxes. Attempts to declare yourself a church, state that you are not subject to taxes on vague legal principles, or other mechanisms to avoid taxes will only lead to two things --- a huge tax bill with penalties and possible jail time. Stay away from promoters of these types of shenanigans.

As outlined in the article, I would urge everyone to report unsolicited phone calls and emails to the IRS.

While on the subject of swindles, Advanced Trading came out with a recent set of articles about Rogue Trading. The entire set includes an interview with Nick Leeson who brought down Barings, perspectives on improving institutional controls, and an outline of the Société Générale fiasco. The entire set of articles is a worthwhile read.