The "Dirty Dozen" tax scams of 2014

The IRS has a warning for Americans -- watch out for tax scams.

Every year the agency releases a "Dirty Dozen" list of the worst tax scams out there. This year, identity theft and phone scams top the list.

IRS Commissioner John Koskinen says even the savviest taxpayers can fall victim if they aren't careful.

"These schemes jump every year at tax time," he said. "Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues."

Here's this year's "Dirty Dozen":

1. Identity theft

Taxpayers who have their identities stolen can find that someone has already submitted a tax return in their name, received a refund and cashed the check.

The best way to guard against this is to keep a close watch on all personal information, particularly Social Security numbers.

Taxpayers who think they might be at risk because, for example, they may have recently lost personal information or had it stolen, should contact the IRS in advance to have special security measures applied to the their tax account. If taxpayers find they've already been victimized by someone filing a false claim, the IRS has a special office for that called the IRS Identity Protection Specialized Unit.

2. Phone scams

IRS phone scams are on the rise, and they can take on a variety of forms.

Some fraudsters call pretending to be with the IRS, telling the taxpayer he/she owes money. They can threaten the taxpayer with arrest, loss of a driver's license or in some cases deportation.

In many cases this is followed up with a call from someone claiming to be with the local police department or DMV.

Others scammers call fishing for personal information like Social Security numbers by telling the taxpayer she's owed a big refund -- she just needs to verify certain personal details.

The IRS says if you get one of these phone calls, turn around and call the IRS at 800-829-1040. And if you know for certain that you don't owe money, call to report the incident at 800-366-4484.

3. Phishing

These scams typically occur via email. The scammer is looking for personal information in order to steal the taxpayer's identity.

Remember, the IRS never initiates contact with a taxpayer via email to request personal or financial information. If you receive an email claiming to be from the IRS, report it to phishing@IRS.gov.

4. Promises of "free money" from inflated refunds

In this scenario, scammers pose as tax preparers, promising the taxpayer a larger-than-expected refund. These fraudsters sometimes go so far as to set up legitimate storefronts during tax season.

They may inflate the taxpayer's refund with bogus tax credits, charging for their services and then leaving the taxpayer to deal with the repercussions. Or worse, they may file a claim in the taxpayer's name and cash the check, without the taxpayer ever knowing.

The IRS says a good rule to follow is to remember that legitimate tax preparers always give the taxpayer a copy of their return, while scammers often don't.

Another thing to keep in mind: taxpayers are legally responsible for what's on their tax forms. Take care when picking a tax preparer.

5. Preparer fraud

Similar to the above, not all tax preparers are on the up-and-up. Some legitimate tax preparers can scam their clients by stealing their identities (using the tax information they provided) or by stealing their refunds.

6. Hiding money offshore

This is a scam taxpayers perpetrate against the IRS to avoid paying all the tax they owe.

Those who hide income from the IRS in offshore accounts could face stiff penalties and even criminal prosecution if caught.

The agency currently has an amnesty program in place that allows taxpayers to voluntarily provide information about hidden offshore income, and to settle all tax obligations.

7. Fake charities

The IRS cautions consumers to be wary of fake charities that contact them looking for donations. This type of activity often spikes in the wake of a natural disaster.

These fraudsters may be looking to simply pocket taxpayers' money, or they may ask for personal information in order to steal a taxpayer's identity.

8. False income, expenses or exemptions

This is another scam taxpayers or preparers try to pull on the IRS.

Taxpayers who want to claim extra tax credits may inflate their income in order to qualify. If caught, they can face a $5,000 penalty.

9. Frivolous arguments

Some taxpayers do not file, using what the IRS calls "frivolous arguments." The agency reminds taxpayers that avoiding filing or paying taxes can result in penalties and criminal prosecution.

10. Falsely claiming zero wages or using a false 1099 form

Some taxpayers file, but use phony information. They can, for example, submit a "corrected" 1099 form as a way of reducing taxable income to zero. This, too, is punishable by fines and criminal prosecution.

11. Abusive tax structures

Complex, multilayered "abusive schemes" using different limited liability companies (LLCs) are sometimes used to hide assets from the IRS.

The IRS warns taxpayers to be cautious. Anyone promising to help hide assets or reduce tax liability is probably a scammer. Ultimately, the taxpayer is on the hook for all the taxes owed, plus penalties.

12. Misuse of trusts

Taxpayers might be lured by someone promoting the transfer of assets into a trust, with the promise of lowering tax liability. Taxpayers are advised to seek help from a trusted advisor before transferring money or other assets to a trust. As with all these scams, following bad advice could leave the taxpayer holding the bag -- facing penalties and prosecution.