“Dirty Dozen” by US IRS & lessons for India

ameya's picture

US IRS annually identifies a list of the top 12 tax-related scams it sees throughout the year. The IRS “Dirty Dozen” highlights various schemes that taxpayers may encounter. This year’s "Dirty Dozen" scams include Phishing, Phone Scams, Identity Theft, Return Preparer Fraud, Fake Charities, Inflated Refund Claims, Excessive Claims for Business Credits, Falsely Padding Deductions on Returns, Falsifying Income to Claim Credits, Abusive Tax Shelters, Frivolous Tax Arguments and Offshore Tax Avoidance. See more details - https://www.irs.gov/uac/irs-recaps-dirty-dozen-list-of-tax-scams-for-2017#IRS

On Frivolous Tax Arguments, US IRS Warns that “Promoters of such schemes encourage taxpayers to make unreasonable and outlandish claims, even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.”

In respect of offshore tax avoidance, US IRS cites “recent string of successful enforcement actions against offshore tax cheats -- and the financial organizations that help them -- show that it’s a bad bet to hide money and income offshore”. US IRS also asks taxpayers to be vigilant against groups masquerading as charitable organizations to attract donations.


Reading this update shows candid admission by IRS that such tax frauds exist and indicates a sincere attempt to educate taxpayers about the same.  Perhaps, Indian Revenue too can take leaf out IRS’s book. During IDS-1 and post demonetization, Indian Government and CBDT have been very open & proactive in its communication. Perhaps, it could be extended to the other areas of tax as well for larger taxpayer awareness.  This “education” will in long term surely encourage more people to come forward and be tax compliant voluntarily.