WASHINGTON — As part of this year’s Dirty Dozen, the Internal Revenue Service continues to warn businesses and others to stay clear of unscrupulous and aggressive promoters of questionable claims for the Employee Retention Credit (ERC).

These questionable ERC claims often put unsuspecting businesses and other entities in jeopardy of penalties, interest and potentially even criminal prosecution for claiming the ERC when they don’t qualify and aren’t entitled to it.

In day two of the Dirty Dozen series, this latest warning comes as the IRS continues to take special steps to counter aggressive marketing around the ERC, sometimes referred to as the Employee Retention Tax Credit or ERTC. Since the IRS announced a moratorium on processing new claims filed after Sept. 14, 2023, the agency’s compliance efforts on ERC claims have topped more than $1 billion so far since last fall as work continues on a number of efforts to counter questionable claims.

With compliance work on ERC claims continuing to expand through both audits and criminal investigations, the IRS reminded businesses they still have an option to pull back on any unprocessed claims. Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.

While this work continues, the IRS continues to urge businesses to carefully review the complex ERC guidelines before submitting a claim. The IRS remains concerned that some ineligible businesses are being encouraged by marketers to submit an incorrect ERC claim; people should contact a trusted tax professional first to avoid potential IRS compliance action in the future.

“We remain concerned that unscrupulous promoters and numerous myths about eligibility for this credit could put well-meaning businesses at risk,” said IRS Commissioner Danny Werfel. “Before anyone files an Employee Retention Credit claim, they should carefully review the eligibility guidelines and talk to a trusted tax professional. Relying on a marketer who is looking to take a hefty percentage fee of the potential claim adds risk for well-meaning businesses given the ongoing IRS compliance work.”

The IRS took significant compliance steps regarding the ERC program after the well-intentioned pandemic-era program came under aggressive, misleading marketing that oversimplified or misrepresented eligibility rules. Promoters pushed more applicants into the program, frequently by taking a percentage of the payout.

When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees during the COVID-19 pandemic while their business operations were either fully or partially suspended due to a government order, or had a decline or significant decline in gross receipts during the eligibility periods.

Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

ERC withdrawal program
The IRS is also continuing to accept and process requests to withdraw an employer’s full ERC claim under a special withdrawal process. The IRS has already received more than $250 million in withdrawals as the agency continues intensifying audits and criminal investigation work in this area.

This withdrawal option allows certain employers that filed an ERC claim but have not yet received a refund to withdraw their submission and avoid future repayment, interest and penalties. Employers that submitted an ERC claim that have not yet been paid can withdraw their claim and avoid the possibility of getting a refund for which they're ineligible. They can also withdraw their claim if they’ve received a check but have not yet deposited or cashed it.

The IRS created the withdrawal option to help small business owners and others who were pressured or misled by ERC marketers or promoters into filing ineligible claims. Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest.

The IRS continues to encourage employers who submitted claims to review the ERC requirements and talk to a trusted tax professional about their eligibility amid misleading marketing around the credit.

For more information on ERC eligibility, taxpayers can see the ERC frequently asked questions and the ERC Eligibility Checklist, which is available as an interactive tool or as a printable guide.

Signs an ERC claim could be incorrect
Recently, the IRS highlighted special warning signs that an ERC claim may be questionable to help small businesses that may need to resolve incorrect claims.

The agency shared suspicious warning signs that could signal future IRS problems involving ERC claims. Built on feedback from the tax professional community and IRS compliance personnel, the warning signs center on misinformation some unscrupulous ERC promoters used.

Here are common red flags IRS is seeing on ERC claims:

• Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon and this could be a sign of an incorrect claim.
• Government orders that don’t qualify. Some promoters have falsely told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily.
• Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period.
• Business citing supply chain issues. Qualifying for the ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for the ERC.
• Business claiming the ERC for too much of a tax period. It's uncommon for an employer to qualify for the ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter.
• Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim the ERC for tax periods when they paid wages to employees.
• Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim the ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim.

Help for businesses that may have been misled on the ERC
Some promoters told taxpayers every employer qualifies for the ERC. The IRS and the tax professional community emphasize that this is not true. Eligibility depends on specific facts and circumstances. The IRS has dozens of resources to help people learn about and check ERC eligibility, and businesses can also consult their trusted tax professional. Key IRS materials include:

• ERC Eligibility Checklist (interactive version and a printable guide) includes cautions about common areas of misinformation and links to facts and examples.
• 7 warning signs ERC claims may be incorrect outlines tactics that unscrupulous promoters have used and why their points are wrong.
• Frequently asked questions about the Employee Retention Credit includes eligibility rules, definitions, examples and more.

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Revenue Procedure 2024-19 to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities.

The guidance issued today provides important clarifying changes to the application and documentation requirements for the 2024 program year. In addition, this revenue procedure provides how the Capacity Limitation for the 2024 program year will be divided across facility categories described and the additional selection criteria application options.

The Inflation Reduction Act added section 48(e) to the federal tax law to provide for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation. Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service.

The final regulations provide definitions and requirements for the program. The regulations state the four project categories under which facilities apply for an allocation, and the increase of either 10% or 20% associated with a project category. Additionally, the regulations:

• Define financial benefits for the two applicable project categories.
• Define energy storage technology installed in connection with the solar or wind facility.
• Define and describe the additional selection criteria for eligible potential applicants.
• Remind potential applicants that facilities placed in service prior to an allocation are not eligible.
• Provide the disqualification and credit recapture rules specific to the program.

Revenue Procedure 2023-27 provided procedures for applicants for the 2023 program year. Soley with respect to the 2024 program year, today’s guidance supersedes Revenue Procedure 2023-27. The Treasury Department and IRS also released Notice 2023-17 on Feb. 13, 2023, to establish the Low-Income Communities Bonus Credit Program. Notice 2023-17 provided initial guidance for potential applicants seeking allocations of calendar year 2023 environmental justice solar and wind capacity limitation.

Revenue Procedure 2024-19 provides clarifying and procedural guidance applicable to the low-income communities bonus credit program (Program) for the 2024 Program year. The Program was established pursuant to the Inflation Reduction Act of 2022. Under this Program, applicants investing in certain solar and wind-powered electricity generation facilities may apply for an allocation of environmental justice solar and wind capacity limitation to increase the amount of an energy investment credit under section 48 for the taxable year in which the facility is placed in service.

Revenue Procedure 2024-19 will be in IRB 2024-16, dated April 15, 2024.

WASHINGTON — The Internal Revenue Service today continues its Dirty Dozen scam series warning taxpayers to watch out for scammers attempting to sell or offer help setting up an Online Account on IRS.gov.

The goal for these criminals is getting personal tax and financial information that can be used to commit identity theft.

The IRS Online Account is a tool that provides convenient access to an individual’s tax information. The information is also valuable to identity thieves who use it to submit fraudulent tax returns in a victim's name to get a big refund. These third-party online account scams are day three of the IRS annual Dirty Dozen tax scam campaign.

“As the IRS and the Security Summit partners strengthen our internal defenses, scammers evolve to come up with new ways to try to steal valuable information from taxpayers,” said IRS Commissioner Danny Werfel. “An Online Account at IRS.gov can help taxpayers view important details about their tax situation. But scammers have realized the sensitive information there is valuable to them, so they’re now focusing on tricking people that they need help setting up an account.”

“This is just an elaborate scam designed to obtain valuable and sensitive tax information that scammers will use to try to steal a refund,” Werfel added. “This is another reminder that people should be wary of unexpected reach-outs from the IRS and other financial institutions. Taxpayers should avoid sharing sensitive personal data over the phone, email or social media to protect themselves and avoid getting caught up in these scams.”

This marks the third day of the special Dirty Dozen series. Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including this Online Account scheme.

IRS Online Account: Steer clear of help from third-party scammers

An IRS Online Account allows taxpayers access to the information about their tax account. They can log in and get the latest on their payment history, current balance, see copies of select IRS notices and more. It is a useful and easy to use tool that scammers target.

The third-party helper scam begins with swindlers posing as a "helpful" third party who offers to help create a taxpayer's IRS Online Account at IRS.gov. Third parties make these offers to steal a taxpayer's personal information. While they may make it seem like a complicated task needing their assistance, taxpayers can and should establish their own Online Account through IRS.gov.

These scammers often ask for the taxpayer's personal information including address, Social Security number or Individual Taxpayer Identification number (ITIN) and photo identification. They can sell the information or use the sensitive details to file fraudulent tax returns, obtain loans and open credit accounts.

The IRS encourages people to watch out for these scams. The only place individuals should go to create an IRS Online Account is IRS.gov. People should not use third-party assistance, other than the approved IRS authentication process through IRS.gov, to create their own IRS Online Account.

Report fraud

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center

Stop MS5040

24000 Avila Road

Laguna Niguel, California 92677-3405

Fax: 877-477-9135

Alternatively, taxpayers and tax professionals may send the information to the IRS Whistleblower Office for possible monetary award. For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

WASHINGTON ― The Internal Revenue Service announced today that almost 940,000 people across the nation have unclaimed refunds for tax year 2020 but face a May 17 deadline to submit their tax returns. 

The IRS estimates more than $1 billion in refunds remain unclaimed because people haven’t filed their 2020 tax returns yet. The average median refund is $932 for 2020, and the state-by-state table below shows how many people are potentially eligible for these refunds in each state along with the median average refund by state. 

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” said IRS Commissioner Danny Werfel. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds. There’s a May 17 deadline to file these returns so taxpayers should start soon to make sure they don’t miss out.” 

Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don’t file within three years, the money becomes the property of the U.S. Treasury. 

But for 2020 tax returns, people have a little more time than usual to file to claim their refunds. Typically, the normal filing deadline to claim old refunds falls around the April tax deadline, which is April 15 this year for 2023 tax returns. But the three-year window for 2020 unfiled returns was postponed to May 17, 2024, due to the COVID-19 pandemic emergency. The IRS issued Notice 2023-21 on Feb. 27, 2023, providing legal guidance on claims required by the postponed deadline. 

The IRS estimates the midpoint for the individual refund amounts for 2020 to be $932 — that is, half of the refunds are more than $932 and half are less. This estimate does not include the Recovery Rebate Credit or other credits that may be applicable; the IRS has previously reminded those who may be entitled to the COVID-era Recovery Rebate Credit in 2020 that time is running out to file a tax return and claim their money. 

“People faced extremely unusual situations during the pandemic, which may have led some people to forget about a potential refund on their 2020 tax returns,” Werfel said. “People may have just overlooked these, including students, part-time workers and others. Some people may not realize they may be owed a refund. We encourage people to review their files and start gathering records now, so they don’t run the risk of missing the May deadline.” 

By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2020. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2020, the EITC was worth as much as $6,660 for taxpayers with qualifying children. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2020 were: 

• $50,594 ($56,844 if married filing jointly) for those with three or more qualifying children:
• $47,440 ($53,330 if married filing jointly) for people with two qualifying children;
• $41,756 ($47,646 if married filing jointly) for those with one qualifying child, and;
• $15,820 ($21,710 if married filing jointly) for people without qualifying children. 

The IRS reminds taxpayers seeking a 2020 tax refund that their funds may be held if they have not filed tax returns for 2021 and 2022. In addition, any refund amount for 2020 will be applied to amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or other past due federal debts, such as student loans. 

Current and prior year tax forms (such as the tax year 2020 Forms 1040 and 1040-SR) and instructions are available on the IRS.gov Forms and Publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

High-income non-filers: IRS compliance letters coming

The IRS also announced Feb. 29 a new effort focused on high-income taxpayers who have failed to file federal income tax returns in more than 125,000 instances since 2017 with taxes being owed in many of those cases.

The new initiative, made possible by Inflation Reduction Act funding, began with IRS compliance letters going out in February on more than 125,000 cases where tax returns haven’t been filed since 2017. The mailings include more than 25,000 to those with more than $1 million in income, and over 100,000 to people with incomes between $400,000 and $1 million between tax years 2017 and 2021. 

Need to file a 2020 tax return? Several options to get key documents 

Although it’s been a few years since 2020, the IRS reminds taxpayers there are ways they can still gather the information they need to file this tax return. But people should start early to make sure they have enough time to file before the May deadline for 2020 refunds. Here are some options: 

• Request copies of key documents: Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years, 2020, 2021 or 2022 can request copies from their employer, bank or other payers. 

• Use Get Transcript Online at IRS.gov. Taxpayers who are unable to get those missing forms from their employer or other payers can order a free wage and income transcript at IRS.gov using the Get Transcript Online For many taxpayers, this is by far the quickest and easiest option. 

• Request a transcript. Another option is for people to file Form 4506-T with the IRS to request a “wage and income transcript.” A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498 and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return. But plan ahead – these written requests can take several weeks; people are strongly urged to try the other options first.

State-by-state estimates of individuals who may be due 2020 income tax refunds

Based on tax information currently available, the IRS estimated how many people in each state may be entitled to a tax refund. The actual refund amount will vary based on a household’s tax situation. 

State or District	Estimated Number of Individuals	Median Potential Refund	Total Potential Refunds*
Alabama	15,200	$926	$16,839,800
Alaska	3,700	$931	$4,335,300
Arizona	25,400	$871	$26,939,600
Arkansas	8,700	$923	$9,392,600
California	88,200	$835	$94,226,300
Colorado	18,500	$894	$20,109,900
Connecticut	9,800	$978	$11,343,600
Delaware	3,600	$945	$4,156,500
District of Columbia	2,900	$968	$3,503,800
Florida	53,200	$891	$58,210,500
Georgia	36,400	$900	$39,175,600
Hawaii	5,200	$979	$5,972,600
Idaho	4,500	$761	$4,369,600
Illinois	36,200	$956	$40,608,000
Indiana	19,200	$922	$20,893,000
Iowa	9,600	$953	$10,601,700
Kansas	8,700	$900	$9,285,600
Kentucky	10,600	$920	$11,236,300
Louisiana	15,100	$957	$17,357,300
Maine	3,800	$923	$4,030,200
Maryland	22,200	$991	$26,365,400
Massachusetts	21,800	$975	$25,071,800
Michigan	34,900	$976	$38,274,800
Minnesota	13,500	$818	$14,043,900
Mississippi	8,100	$861	$8,685,000
Missouri	19,500	$893	$20,803,400
Montana	3,400	$851	$3,632,100
Nebraska	4,700	$901	$5,007,300
Nevada	10,200	$890	$11,143,900
New Hampshire	4,200	$982	$4,923,100
New Jersey	24,400	$920	$27,408,300
New Mexico	6,500	$868	$7,032,700
New York	51,400	$1,029	$60,837,400
North Carolina	27,500	$895	$29,304,100
North Dakota	2,200	$953	$2,482,600
Ohio	31,400	$909	$32,939,900
Oklahoma	14,300	$902	$15,566,900
Oregon	15,300	$847	$15,857,800
Pennsylvania	38,600	$1,031	$43,412,900
Rhode Island	2,600	$986	$2,980,500
South Carolina	11,900	$840	$12,564,900
South Dakota	2,200	$892	$2,346,300
Tennessee	16,800	$909	$18,007,000
Texas	93,400	$960	$107,130,200
Utah	7,800	$836	$8,191,700
Vermont	1,700	$911	$1,818,600
Virginia	25,900	$914	$28,944,600
Washington	26,200	$976	$31,110,300
West Virginia	3,800	$950	$4,130,400
Wisconsin	11,800	$837	$12,139,400
Wyoming	2,100	$961	$2,416,300
Totals	938,800	$932	$1,037,161,300

Notice 2024-32 provides guidance for qualified student loan bonds to clarify certain requirements for tax-exempt bond financing for loan programs of general application approved by a State under § 144(b)(1)(B) (State Supplemental Loan programs).  Specifically, this notice addresses eligibility of borrowers of loans through State Supplemental Loan programs and the loan size limitation for State Supplemental Loans.  This notice also provides guidance on whether an issue of State or local bonds the proceeds of which are used to finance or refinance qualified student loans or to finance qualified mortgage loans is a refunding issue. 

Notice 2024-32 will be in IRB: 2024-16, dated April 15, 2024.

WASHINGTON — The Internal Revenue Service today further postponed until Aug. 7, 2024, various tax-filing and tax-payment deadlines for individuals and businesses affected by the Aug. 8, 2023, wildfires in Hawaii. Previously, the deadline was Feb. 15, 2024.

In general, this means that affected individuals, businesses and tax-exempt organizations will now have until Aug. 7, 2024, to file their 2023 returns and pay any taxes due. This is in addition to the expansive relief, announced last August, shortly after the wildfires occurred.

The IRS is offering relief to Maui and Hawaii counties, the two areas designated by the Federal Emergency Management Agency (FEMA). Individuals and households that reside or have a business in these localities qualify for tax relief. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 8, 2023, through Aug. 7, 2024 (postponement period). As a result, affected individuals and businesses will have until Aug. 7, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Aug. 7, 2024, deadline will now apply to:

• Individual income tax returns and payments normally due on April 15, 2024.
• 2023 contributions to IRAs and health savings accounts for eligible taxpayers.
• Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, April 15 and June 17, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, April 30 and July 31, 2024.
• Calendar-year partnership and S corporation returns normally due on March 15, 2024.
• Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2024.
• Calendar-year tax-exempt organization returns normally due on May 15, 2024.

In addition, individuals, businesses and tax-exempt organizations who had valid extensions to file their 2022 returns will now have until Aug. 7, 2024, to file them. However, payments on these returns are not eligible for relief because they were originally due before the wildfires occurred. The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated or call the IRS at 866-562-5227 to receive disaster tax relief.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Reminder about extensions

The IRS urges anyone who needs an additional tax-filing extension, beyond Aug. 7, 2024, for their 2023 federal income tax return to request it electronically by April 15, 2024. Though a disaster-area taxpayer qualifies to request an extension between April 15 and Aug. 7, 2024, a request filed during this period can only be submitted on paper. Whether requested electronically or on paper, the taxpayer will then have until Oct. 15, 2024, to file, though payments are still due on Aug. 7, 2024. Visit IRS.gov/Extensions for details.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed this year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2024. Be sure to write the FEMA declaration number – 4724-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Reminder about tax return preparation options

• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
• Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

• MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members and some veterans, with no income limit.

WASHINGTON – Four years after the enactment of a key pandemic-era law, the Internal Revenue Service released updated numbers showing Criminal Investigation (CI) has investigated 1,644 tax and money laundering cases related to COVID fraud potentially totaling $8.9 billion, with well over half that amount coming from cases opened in the last year.

These cases include a wide range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families and small businesses under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

As of Feb. 29, 795 people have been indicted for their alleged COVID-related crimes and 373 individuals have been sentenced to an average of 34 months in federal prison. During the last four years, CI has obtained a 98.5% conviction rate in prosecuted COVID fraud cases.

“The work by IRS Criminal Investigation provides a vital role in protecting against fraud and serves a key part in the agency’s wider efforts to ensure fairness in the nation’s tax system,” said IRS Commissioner Danny Werfel. “Protecting taxpayers against fraud in pandemic-era programs is just one example of the important role that CI plays in the law enforcement community. A healthy budget for the IRS helps us get the job done, and the work of CI provides a critical safety net to protect the nation against fraud.”

Looking ahead, CI’s ongoing fraud-protection work will be bolstered by the additional funding the IRS received through the Inflation Reduction Act, which is providing the agency with additional resources to ensure fair enforcement of the laws as well as improved taxpayer service, new technology and wider IRS transformation efforts.

“In the last year alone, we have opened nearly 700 new COVID fraud investigations that collectively add up to $5 billion in potential fraud,” said CI Chief Guy Ficco. “While COVID may no longer be top of mind to the average American when they wake up, the fraud committed through these different programs is very much top of mind to CI. Our special agents continue to seek out fraudsters who stole money from government loan programs for their personal gain.”

Recent sentencings include:

Long Island man sentenced to 10 years in prison for sprawling COVID-19 loan fraud:

In March 2024, Rami Saab, also known as “Rami Hasan,” was sentenced to 10 years in prison and required to pay $9.6 million in restitution for his role as the mastermind behind a sprawling conspiracy to fraudulently obtain loans amid the COVID-19 pandemic. Saab and a network of co-conspirators fraudulently applied for more than $32 million in loans from the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) on behalf of shell corporations they controlled. Relying on false information and fabricated documentation supplied by Saab and his conspirators, the Small Business Administration (SBA) and private banks administrating the PPP and EIDL programs granted at least 20 such applications, resulting in Saab and his fellow conspirators receiving $9.6 million in emergency-relief funds intended for distressed small businesses. Using a web of more than 50 otherwise dormant bank accounts, Saab and others laundered the proceeds before using the funds for their own self-enrichment.

Toledo area man sentenced to 94 months in prison for COVID fraud:

Terrence L. Pounds was sentenced in March 2024 to 94 months in prison and ordered to pay more than $4.2 million dollars to the SBA after being convicted of conspiracy to commit wire fraud, wire fraud and money laundering. Pounds and his co-defendants devised a scheme to obtain SBA-financed loans from the EIDL Program and the PPP under false pretenses, often claiming the loans were for nonprofit, faith-based organizations with over $1 million in revenue and 15 employees. He successfully obtained millions of dollars in loans and then used the money to purchase several new vehicles, which were later forfeited to the U.S. government.

The CARES Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering from the economic effects of the COVID-19 pandemic.

CI encourages the public to share information regarding known or suspected fraud tied to the CARES Act by contacting their local CI field office. Contact information for each CI field office is listed in the division’s annual report.

CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a nearly 90% federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

WASHINGTON —The Internal Revenue Service today kicked off the annual Dirty Dozen list with a warning for taxpayers to be aware of evolving phishing and smishing scams designed to steal sensitive taxpayer information.

With taxpayers continuing to be bombarded by email and text scams, the IRS and the Security Summit partners warned individuals and businesses to remain vigilant against these attacks. Fraudsters and identity thieves attempt to trick the recipient into clicking a suspicious link, filling out personal and financial information or downloading a malware file onto their computer.

"Scammers are relentless in their attempts to obtain sensitive financial and personal information, and impersonating the IRS remains a favorite tactic,” said IRS Commissioner Danny Werfel. “People can be anxious to get the latest information about their refund or other tax issues, so scammers frequently try using the IRS as a way to trick people. The IRS urges people to be extra cautious about unsolicited messages and avoid clicking any links in an unsolicited email or text if they are uncertain.”

Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money.

Phish or smish: Don’t take the bait

The IRS continues to see a barrage of email and text scams targeting taxpayers and others. These schemes frequently peak during tax season but they continue throughout the year. Taxpayers face a wide variety of these scams and schemes. And tax professionals, payroll providers and human resource departments remain favorite targets of email and text scams since they have sensitive personal and financial information. One common example remains the “new client” scamthat can target tax pros and others.

That means taxpayers and tax professionals should be alert to fake communications posing as legitimate organizations in the tax and financial community, including the IRS and state tax agencies. These messages arrive in the form of unsolicited texts or emails to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft. There are two main types:

• Phishing: An email sent by fraudsters claiming to come from the IRS. The email lures the victims into the scam with a variety of ruses such as enticing victims with a phony tax refund or threatening them with false legal or criminal charges for tax fraud.
• Smishing: A text or smartphone SMS message where scammers often use alarming language such as, "Your account has now been put on hold," or "Unusual Activity Report," with a bogus "Solutions" link to restore the recipient's account. Unexpected tax refunds are another potential lure for scam artists.

Never click on any unsolicited communication claiming to be the IRS as it may surreptitiously load malware. It may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

In some cases, phishing emails may appear to come from a legitimate sender or organization that has had their email account credentials stolen. Setting up two-factor or multi-factor authentication with their email provider can reduce the risk of individuals having their email account compromised.

Posing as a trusted organization, friend or family member remains a common way to target individuals and tax preparers for various scams. Individuals should verify the identity of the sender by using another communication method, for instance, calling a number they independently know to be accurate, not the number provided in the email or text.

The IRS initiates most contacts through regular mail and will never initiate contact with taxpayers by email, text or social media regarding a bill or tax refund.

What to do
Individuals should never respond to tax-related phishing or smishing or click on the URL link. Instead, report all unsolicited email - including the full email headers - claiming to be from the IRS or an IRS-related function to phishing@irs.gov. If someone experienced any monetary losses due to an IRS-related scam incident, they should report it to the Treasury Inspector General for Tax Administration (TIGTA), the Federal Trade Commission and the Internet Crime Complaint Center (IC3).

If a taxpayer receives an email claiming to be from the IRS that contains a request for personal information, taxes associated with a large investment, inheritance or lottery.

• Don't reply.
• Don't open any attachments. They can contain malicious code that may infect the computer or mobile phone.
• Don't click on any links. If a taxpayer inadvertently clicked on links in a suspicious email or website and entered confidential information, visit the IRS’ identity protection page.
• Send the full email headers or forward the email as-is to phishing@irs.gov. Don't forward screenshots or scanned images of emails because this removes valuable information.
• Delete the original email.

If a taxpayer receives a text claiming to be from the IRS that contains a request for personal information, taxes associated with a large investment, inheritance or lottery.

• Don't reply.
• Don't open any attachments. They can contain malicious code that may infect the computer or mobile phone.
• Don't click on any links. If a taxpayer clicked on links in a suspicious SMS and entered confidential information, they should visit Identity Theft Central.
• Report the message to 7726 (SPAM).
• Include both the Caller ID and the message body in an email and send to phishing@irs.gov. Copy the Caller ID from the message by pressing and holding on the body of the text message, then select Copy, paste into the email. If the taxpayer is unable to copy the Caller ID or message body, forward a screenshot of the message.
• Delete the original text.
• For more information see the IRS video on fake IRS-related text messages.

The Report Phishing and Online Scams page at IRS.gov provides complete details. The Federal Communications Commission's Smartphone Security Checker is a useful tool against mobile security threats.

Report fraud
As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS urges individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

To report a tax scheme or a dishonest tax return preparer individuals should send a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, (along with any supporting materials) via mail or fax to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:
Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677 3405
Fax: 877-477-9135

Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a reward. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

More information:

• Reporting Phishing and Online Scams
• Here's How to Avoid IRS Text Message Scams
• Identity Theft Central
• Federal Communications Commission's Smartphone Security Checker
• Federal Trade Commission: How to recognize and report spam text messages

Inside This Issue

1. March 22 ERC deadline rapidly approaching
2. IRS seeks to hire revenue agents nationwide
3. Registration open for IRS Nationwide Tax Forum
4. Ficco becomes IRS Criminal Investigation chief
5. New Digital Assets webpage
6. Physical presence education requirement waiver extended for enrolled actuaries 
7. News from the Justice Department’s Tax Division

1.  March 22 ERC deadline rapidly approaching

The IRS reminds businesses of the March 22 deadline for the Employee Retention Credit (ERC) Voluntary Disclosure Program. Businesses are urged to review the Employee Retention Credit (ERC) guidelines to avoid future compliance action for improper claims. “The window of opportunity is closing for those with questionable claims to fix things before they receive follow-up compliance action. Taking action now will avoid potentially hefty penalties and interest if the IRS takes action later. The deals available now are good, and the cost and risk for bad claims will sharply escalate over time,” said IRS Commissioner Danny Werfel.

The IRS offers two programs to voluntarily resolve improper claims and reduce costs and follow-up steps for businesses. They are the ERC Voluntary Disclosure Program and the claim withdrawal process. The IRS will continue a wide range of tax compliance activities on ERC claims in the future, so the agency urges a close look at these special programs.

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2.  IRS seeks to hire revenue agents nationwide

Tax pros: With the IRS hiring thousands of revenue agents, the agency encourages members of the tax professional community to consider applying for one of the many career opportunities:

• Internal Revenue Agent (Examiner) GS-5-12 
• Internal Revenue Agent (Examiner) GS-13 
• Internal Revenue Agent (Examiner) GS-14

These positions will be filled using a Direct Hire Authority (DHA), which accelerates the hiring process and helps to fill IRS mission-critical positions immediately. Tax pros should note that recruitment incentives may be offered. For more information, visit the IRS Careers page.

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3.  Registration open for IRS Nationwide Tax Forum

Tax Pros: Registration is now open for the 2024 IRS Nationwide Tax Forum. Register today to ensure your space this summer in one of the five following cities:

• Chicago: July 9 – 11                                                         
• Orlando: July 30 – Aug. 1                                               
• Baltimore: Aug. 13 – 15                                                       
• Dallas: Aug. 20 – 22
• San Diego: Sep. 10 – 12

The IRS Nationwide Tax Forum offers continuing education and networking opportunities to enrolled agents, certified public accountants, attorneys and other tax professionals. Each forum offers more than 40 seminars and workshops on a wide variety of federal and state tax issues presented by experts from the IRS and its partner associations. Attendees may earn up to 18 continuing education credits.

Visit 2024 IRS Nationwide Tax Forum for information on the program, accommodations and registration.

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4.  Ficco becomes IRS Criminal Investigation chief

The IRS announced its new IRS Criminal Investigation chief. Effective April 1, Guy Ficco, the current Deputy Chief and a 29-year agency veteran, will lead a staff of more than 3,200 Criminal Investigation employees, including 2,200 special agents. In addition to serving as CI’s deputy chief, Ficco served in leadership positions across the agency, ranging from supervisory special agent to executive director of Global Operations, Policy and Support. He is also a certified fraud examiner. “Guy has enjoyed a remarkable career as a CI special agent and leader who brings a wealth of experience to this job,” said IRS Commissioner Danny Werfel.

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5.  New Digital Assets webpage

The IRS has announced an improved Digital Assets webpage on IRS.gov.

The redesigned webpage features:

• Current IRS information on digital assets, and how to answer the digital asset question on a tax return: when to check yes or no;
• Streamlined information for ease of understanding; and                 
• A user-friendly layout featuring links at the top of the page to help viewers quickly find key information.

More information is available at IRS.gov and Frequently Asked Questions on virtual currency transactions.

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6.  Physical presence education requirement waiver extended for enrolled actuaries

The Joint Board for the Enrollment of Actuaries is extending the temporary waiver of its physical presence requirement for continuing professional education (CPE) programs. The Joint Board issued proposed regulations to eliminate the physical presence requirement altogether. The extended waiver applies to all enrolled actuaries and will remain in effect until proposed regulations are finalized.

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7.  News from the Justice Department’s Tax Division

The Justice Department filed a complaint seeking to bar Chicago-area tax return preparer Sir-Michael Davenport from owning or operating a tax return preparation business and preparing tax returns for others. By repeatedly understating his customers’ tax liabilities, the complaint alleges the United States has been harmed by Davenport’s conduct, resulting in a significant loss in tax revenue of an estimated $715,407.

A complaint seeking to bar Florida-area return preparer Kenia Rodriguez, also known as Kenia Legon, was filed in the U.S. District Court for the Middle District of Florida. The civil complaint alleges that Rodriguez willfully prepared false returns on behalf of her clients and that the United States has been harmed by her conduct, leading to a tax loss of more than $6 million since 2021. In addition to seeking an injunction against Rodriguez, the government requests an order of disgorgement to prevent her from profiting from violating the internal revenue laws.

The United States filed a civil complaint in the U.S. District Court for the Southern District of Texas against Houston-based return preparer Morshanda Lewis. The complaint alleges Lewis prepared tax returns that claimed false credits despite several warnings from the IRS. For tax years 2019 to 2021, Lewis’ conduct caused a significant loss in tax revenue, estimated at over $1 million.