Seen those credit card advertisements telling you to pay your taxes via credit card and earn free airline mileage. What the credit card companies fail to tell you (or tell you in fine print in the back of the message) is that the they charge the same fees they charge merchants (often between 2% and 2.5%) which are not covered by the IRS. Thus, you pay them.
Unless your mileage points are worth more than 2-2.5% of the amount you charge, this only makes sense for the credit card companies.
Fraudulent Email
The Internal Revenue Service has issued several recent consumer warnings on the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity and assets. When identity theft takes place over the Internet, it is called phishing.
The IRS periodically alerts taxpayers to, and maintains a list of, phishing schemes using the IRS name, logo or Web site clone. If you've received an e-mail, phone call or fax claiming to come from the IRS that seemed a little suspicious, you just may find it on this list.
Finally, if you get a phone call, fax or letter from someone who claims to be an IRS employee, you can verify it by calling 1-800-829-1040 to see if there's a reason the IRS would be contacting you and whether there is such an employee. As for a phishing e-mail, forward it to phishing@irs.gov, then delete it from your compute
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Refund Anticipation Loans
Loans Secured by Tax Refunds
Additional Resources
Debt Consolidator
Debt Consolidation Mortgage
Debt Consolidation Loans
Car Title Loans
Rent-to-Own
Tax Refund Loans
Payday Loans
Also known as state and federal refund anticipation checks, refund anticipation loans (RAL), and instant refund loans, these short-term loans are meant to offer consumers fast access to their tax refund dollars. Instead of waiting weeks to receive their full refund from the IRS, these offerings provide customers with the convenience of receiving their money in the near-term, minus the associated fees and interest charges.
The problem with these loans is the high fees charged. Many taxpayers would be better off adjusting their withholding or estimates to avoid refunds. A refund is just a loan to the government at 0% interest. Adding fees on top of this is costly.
Frivilous Tax Argument
The IRS states that anyone who contemplates arguing on legal grounds against paying his or her fair share of taxes should first read the 84-page document, The Truth About Frivolous Tax Arguments.
Congress, in 2006, increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.
The 2011 version of the IRS document includes numerous recently decided cases that continue to demonstrate that frivolous positions have no legitimacy
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The Home-Based Business Scam
This scam purports to offer tax “relief” but in reality is illegal tax avoidance. The promoters of this scheme claim that individual taxpayers can deduct most, or all, of their personal expenses as business expenses by setting up a bogus home-based business. But the tax code firmly establishes that a clear business purpose and profit motive must exist in order to generate and claim allowable business expenses.
There are many more.. The best advice is fully investigate any money-related offer.
