Tax scams are becoming more common, deceitful, and creative as time goes on — and you could unknowingly fall prey to one of them. The IRS recently released its list of “Dirty Dozen” scams, which are the top 12 schemes circulating in 2023. Here’s what you need to know about these IRS scams.
Phishing and Smishing
Phishing is a scam in which someone emails you while posing as an IRS officer to trick you into giving them financial or personal information. Smishing involves sending fraudulent text messages in which someone uses a fake number to scam you.
Remember that the IRS will never email or text you about a tax bill or refund.
Employee Retention Credit Claims
The Employee Retention Credit is available to certain businesses, but false information has been circulating in the media lately. You can find legitimate information on the IRS website if you’re considering applying for this credit.
Fake Online Account Help
The IRS encourages taxpayers to set up online accounts to make payments online, review their tax returns, and complete related actions. But recently, scammers have begun posing as IRS employees and offering to help taxpayers set up their accounts, at which point they steal their tax information.
Scammers often fabricate charities after national disasters to collect money from unsuspecting taxpayers. Ensure you verify a charity’s cause before donating. If you accidentally donate to a fake charity, you won’t be able to write this donation off on your taxes.
Unscrupulous Tax Return Preparers
If you want to enlist a tax professional to prepare your tax returns, do your due diligence to find a reliable, qualified CPA. Avoid preparers who charge outrageous fees, inflate your tax returns, or encourage you to claim false deductions. All legitimate tax preparers should have an IRS Preparer Tax Identification Number you can review.
False Fuel Tax Credit Claims
Scammers have been convincing unsuspecting taxpayers to claim fuel tax credits incorrectly. Remember that these credits are only available through Form 4136 for off-highway business and farming use; they do not apply to most taxpayers.
Bad Advice on Social Media
You’ve probably heard that everything you read on social media isn’t necessarily true, and the same goes for tax advice. Your Facebook friends may share tax advice they believe is true, but you should take everything you read with a grain of salt. Scam posts are circulating that are misleading social media users about their tax returns.
Offer in Compromise Mills
If you owe back taxes, you may qualify for an Offer in Compromise to reduce the amount you owe. But beware of OIC mills that offer to settle your tax debt for an incredulously small amount while charging steep fees.
Spearphishing is a type of phishing that targets your usernames, passwords, and financial information. Watch out for fraudulent parties requesting this information.
High-Income Filer Scams
Word has spread recently of IRS tax scams that could allow high-income earners to skirt tax laws. Don’t fall for these scams; violating tax rules could lead to criminal charges.
International Tax Schemes
If you have international accounts, you may hear about potential methods of evading taxes by contributing to IRAs in foreign countries. These schemes could also land you in jail; avoid falling for them, even if the scammer promises they will be effective.
Fraudulent Tax Avoidance Strategies
Any scheme that claims to help you successfully avoid paying taxes is fraudulent. The IRS is very attuned to taxpayer behavior, and you don’t want to risk the severe penalties that come with tax evasion.
Need help identifying IRS scams? Call Levy & Associates Tax Consultants today at 800-TAX-LEVY for trustworthy, qualified tax assistance.