BizBoost News
Volume 11, Issue 12
For distribution 11/29/21; publication 12/02/21
The “Dirty Dozen” IRS Tax Scams
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. Below are five of the most common tax scams impacting taxpayers today, as well as tips to not become a victim:
1.
Fake Charities are created to exploit natural disasters and other situations such as the current Covid-19 pandemic. Criminals set up fake charities and solicit donations by telephone, text, social media, or email. The fake charity might have a familiar-sounding name, tricking the taxpayer into thinking they are donating to a reputable charity.
When requested, legitimate charities will provide their Employer Identification Number (EIN), which can be used to verify their legitimacy by using the IRS search tool:
https://www.irs.gov/charities-non-profits/tax-exempt-organization-search
2.
Immigrant/Senior Fraud scammers target groups with limited English knowledge as well as senior citizens. The taxpayer may receive a threatening phone call from someone pretending to be an IRS representative. The caller might threaten jail time, loss of driver license, or deportation if their demands aren’t met.
The first contact that the IRS makes with a taxpayer will typically be through the mail – they will not initiate communication by phone. Legitimate IRS employees will never use scare tactics such as threatening to revoke licenses or have a person deported.
3.
Offer in Compromise “mills”—an Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS to resolve a taxpayer’s tax debt. Taxpayers should be wary of misleading and aggressive sales claims that a company can settle tax debt for “pennies on the dollar” or that they can secure larger offer settlements, which often cost the taxpayer thousands of dollars in vendor charges.
Taxpayers should first check if they qualify for an OIC by using the IRS online pre-qualifier tool: https://irs.treasury.gov/oic_pre_qualifier/.
4.
“Ghost” Tax Return Preparers will prepare a taxpayer’s return but refuse to sign the return as the paid preparer. Not signing a return is a red flag that the preparer may be looking for a quick profit by promising a big refund or charging fees based on the size of the refund. A “ghost” preparer may require payment in cash only, make up income to qualify the client for a tax credit, claim fake deductions to increase the size of the refund, or list their own bank account instead of the taxpayer’s for direct deposit of refunds.
Avoid falling victim to an unscrupulous tax preparer by choosing your preparer wisely and reviewing their credentials and qualifications carefully.
5.
Unemployment Insurance Fraud typically involves individuals obtaining state or local assistance that they are not entitled to, often by coordinating with or against employers and financial institutions. This can entail multiple types of fraud, including identity-related fraud, employer-employee collusion fraud, misrepresentation of income fraud, and more. There are a number of financial red flags to indicate unemployment fraud, including (but not limited to):
- Unemployment payments coming from a state other than the state where the customer supposedly resides/previously worked;
- Multiple unemployment payments made within the same disbursement window;
- Unemployment payments being made in the name of someone other than the account holder;
- A higher amount of unemployment payments in the same timeframe compared to other similar customers
Stay alert to these situations to protect your financial health. For more on the Dirty Dozen, here is the IRS web page:
https://www.irs.gov/newsroom/irs-dirty-dozen-list-warns-people-to-watch-out-for-tax-related-scams-involving-fake-charities-ghost-preparers-and-other-schemes
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Our latest blog: “The “Dirty Dozen” IRS Tax Scams” is available now! Subscribe here: [link]
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. Learn about the five most common scams in our latest blog article: [link]
Our latest blog article reviews the five most common tax scams impacting taxpayers today, as well as tips to not become a victim. Get instant access here: [link]
DID YOU KNOW… Fake Charities are created to exploit natural disasters and other situations such as the current Covid-19 pandemic. When requested, legitimate charities will provide their Employer Identification Number (EIN), which can be used to verify their legitimacy by using the IRS search tool. Learn more about the most common tax scams here: [link]
A common tax scam is Immigrant/Senior Fraud. Scammers target groups with limited English knowledge as well as senior citizens. To avoid this type of scam, keep in mind that the first contact the IRS makes with a taxpayer will typically be through the mail – they will not initiate communication by phone. Legitimate IRS employees will never use scare tactics. Learn more here: [link]
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. You can learn about the five most common tax scams in our latest blog article, and find the whole IRS Dirty Dozen List on the IRS website: [link]
DID YOU KNOW… One of the most common tax scams is “Ghost” Tax Return Preparers. These people will prepare a taxpayer’s return but refuse to sign the return as the paid preparer. Learn more in our latest blog article: [link]
The five most common tax scams are Fake Charities, Immigrant/Senior Fraud, Offer in Compromise Solicitations, “Ghost” Tax Return Preparers, and Unemployment Insurance Fraud. Learn more about each of these scam types in our latest blog article. Sign up for our newsletter for instant access: [link]
