The IRS has identified the "Dirty Dozen" tax scams of 2011. Participating in or falling victim to them can result in real harm to your pocketbook and your freedom. Here are five of them, in no particular ranking of "dirtiness":
Hiding income offshore
People used to be able to get away with this because of the IRS' former inability to track offshore accounts. Things have changed, and penalties have been increased. Any tax strategy that requires secrecy as an element for success is highly suspect and probably should be avoided.
Identity theft and "phishing"
It is absolutely critical to protect your personal information. All an identity thief needs are your name, birthdate, and social security number to make your life a living hell. Watch out whenever anyone asks for those bits of information, and protect yourself by shredding documents that may contain sensitive information about you before you discard them. Also beware that identity thieves are out there trying to gather your personal information any way they can–through email, by posing as government personnel, by spyware programs that can steal passwords from your computer, and a variety of other nefarious means.
Return preparer fraud
Be careful who you trust with preparing your returns. If you have a fairly complicated return, it would behoove you to work with a CPA. In any event, be sure to work with trustworthy professionals in whatever you do.
False or misleading forms
Some folks claim refunds to which they know they are not entitled. Obvious no-no. Don't file a return that does not pass the smell test.
People sometimes make the darndest arguments. Here is one that will land you in the pokey. Premise 1: there are ample declarations by the IRS in a variety of publications that our income tax system is "voluntary." Premise 2: I have the right to opt out of any "voluntary" income tax system. Conclusion: by golly, I will opt out of the U.S. income tax system and there is nothing anybody can do to me if I do.
Please don't get caught up in any "strategy" that would seem to enable you to evade taxes. Tax avoidance or minimization through recognized legitimate means (such as deductions for charitable contributions and mortgage interest) is good stewardship. Tax evasion is a crime, and it will eventually catch up with you.