The Internal Revenue Service (IRS) just wrapped up its list of the top 12 tax scams for this year.
The annual “Dirty Dozen” list published by the IRS educates taxpayers, corporations, and agencies about the most common scams encountered by the IRS. This year, the IRS broke its list into five groups, with examples of each type of scheme included. Let’s take a look:
- Pandemic-associated scams: The pandemic offered no respite from scammers trying to skim money from public programs intended to help people struggling with the impacts of COVID-19. One such scheme was fake employment offers. People laid off and struggling to survive answered online job postings, providing personal and financial information during phony job interviews and onboarding. Respondents to these types of job offers were left without work and oftentimes the threat of identity theft. Other pandemic-related schemes included the filing of fraudulent tax returns, solicitations by fake charities, and scamming of economic impact payments, tax refunds, and unemployment benefits.
- Abusive tax transactions: This group includes four schemes almost guaranteed to cause a tax controversy – from improperly claiming the transfer of appreciated assets, to contributing to retirement accounts located in offshore jurisdictions like Malta. Transactions involving U.S. taxpayers and foreign captive insurance companies are included and the group is rounded out by transactions that make illegal use of installment sale rules by sellers.
- Spear phishing and suspect communications techniques: Two groups included on the Dirty Dozen list this year revolve around the use of social engineering to obtain financial or other information from tax preparers, taxpayers, and other agents in the financial industry. Email, social media, telephone, and text messaging can all be manipulated to steal important personal information that can later be sold or used to perpetrate a bigger hack. Authentic-looking messaging, or spear phishing, can trick tax professionals or corporate employees into providing sensitive information or lead to the uploading of malware.
- Offers in Compromise: Taxpayers who find themselves in arrears to back taxes and penalties can fall prey to unscrupulous individuals and businesses who promise to reduce their tax liability through an Offer in Compromise (OIC). While an OIC is a legitimate tool for reducing a tax burden in certain circumstances, OIC preparers lead unfortunate taxpayers astray by promising OICs are easy to obtain and affordable. The IRS also warns of tax preparers who charge a fee and deliver a false tax return that the preparer does not sign.
The annual Dirty Dozen list is a reminder of the schemes and scams that people fall for every day. For the fraudsters who perpetrate these schemes, the IRS may be closer than you think. If you are concerned you may have been victimized by a fraudulent tax preparer—or you are worried about a criminal tax audit—speak with an experienced tax attorney in your area for options and assistance.
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If you receive an IRS audit letter or are challenged by a tax controversy in Cleveland, Chicago, or elsewhere nationally or abroad, the tax attorneys at Robert J. Fedor, Esq., LLC can help. We deliver seasoned, strong criminal tax defense. Call us at 800-579-0997 or contact us online.