taxes

Beware these 'dirty dozen' tax scams that can cost you big and even land you in jail

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Excessive business credit claims
Excessive business credit claims | Justin Lewis/Getty Images

Excessive business credit claims

As any motorist can attest, Uncle Sam collects taxes on gasoline, diesel and other types of fuel. However, some commercial uses of these fuels are nontaxable.

Such tax-free fuel circumstances include the use of farm equipment, certain boats, trains and airplanes. In some cases, individuals and businesses that purchase fuel for one of those purposes can even claim a tax credit.

That possibility has led to improper claims for the fuel tax credit.

The false fuel tax-credit claims generally come in two forms, says the IRS. An individual or business may make an erroneous claim on their otherwise legitimate tax return. Or an identity thief may claim the credit in a broader fraudulent scheme.

The research tax credit is another of these business tax credits that have been misused by scammers.

The IRS says the filters in its tax processing software have prevented a significant number of questionable tax credit claims from going through. The IRS has taken additional steps to identify returns for review that claim fuel tax and other tax credits. Unsupported claims for these credits may land taxpayers and their preparers in serious IRS trouble.

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