Drum roll, please. The No. 1 worst tax scam continues to be identity theft. It's topped the dirty dozen scam list for years.
The IRS says more identity thieves are looking for ways to get their hands on taxpayers' personal information. Once they do, they typically file a tax return as the unsuspecting taxpayer and claim a fraudulent refund.
The victimized taxpayer often doesn't realize there's a problem until he files his return. That's when the legitimate filer gets an IRS notice informing him that more than one return was filed in his or her name and the refund has been sent to someone else.
To fight growing identity theft, the IRS has expanded a variety of anti-fraud methods, including stepped-up internal reviews to spot false returns before tax refunds are issued. In 2012 alone, the IRS kept more than $20 billion worth of refunds from going to criminals who had tried to claim the money by filing false returns.
The IRS has a special section on IRS.gov dedicated to identity theft issues. If you discover or fear you are a tax ID theft victim, contact the IRS Identity Protection Specialized Unit at (800) 908-4490.