Scams are ubiquitous. Regardless of background or business, there will be a scam attempt at some point in your future. There is also the possibility that you are involved in a tax scam as well. Each year, the Internal Revenue Service (IRS) posts a list of commonplace scams it sees all the time. Let’s take a look.
What’s on the Dirty Dozen list this year?
Not surprisingly, scams are continually spawned through social media and emerging AI tools. Here are six scams from the IRS Dirty Dozen list that deserve particular attention this year:
- Fake, fake, fake: Scammers are relentlessly impersonating the IRS through text messages, email, and links to fake websites. Their messaging is generally urgent and may threaten tax litigation if you do not pay up. The IRS reminds taxpayers not to click on attachments or other links that could introduce them to the world of malware and ransomware.
- AI impersonation: Artificial intelligence is used by impersonators as well. As technology improves, so do spoofed robo- and personal calls. The IRS generally initiates contact by mail and does not demand immediate, urgent payment through unsolicited phone calls, text messages, or emails. So hang up the phone, verify the source of the communication, and contact a legitimate IRS number if you have concerns.
- Not-so-nice charities: Legitimate charities can come with a tax deduction. Fraudsters are creating fake charities and pop-up sites when disaster strikes. Save your money and your personal information by checking to make sure you are giving aid to a legitimate organization.
- Poor tax advice: Questionable tax advice has been around forever. Like a game of Whack-a-Mole, it pops up in your email, on television, and in conversation with business associates. Social media is the place to be for bad advice these days. Whether it is advice claiming you can easily avoid an IRS audit, improperly claim a tax credit, or misuse payroll taxes, following bad advice can lead to audits, penalties, and other serious tax consequences.
- Identity theft: The number of taxpayers suffering identity theft involving their IRS account continues to rise. The IRS advises taxpayers to create and manage their own tax accounts directly using official channels instead. Respond to a pop-up ad for a business that will do it for you, and you may find your identity and your tax refund have both been stolen.
- Capital gains: The IRS reports an increase in fraudulent claims for refundable tax credits related to undistributed capital gains. To create a notice of undistributed long-term capital gains, use Form 2439. Remember, as with any fraudulent tax return, submitting false information on your Form 2439 could land you with a refund delay, audit, or penalty.
Understanding Tax Scams and Tax Fraud
Tax scams continue to evolve as criminals adopt new technology and new ways to target taxpayers. Recognizing the warning signs, understanding forms of tax fraud, and how these schemes can cross into tax fraud can help protect your finances and your standing with the IRS. While many scams are intended to steal money or personal information, others encourage taxpayers to file inaccurate returns or claim tax benefits they are not entitled to receive. Even when someone else promotes the scheme, taxpayers are generally responsible for the accuracy of the information submitted on their tax returns. For additional context, see our resource, Understanding Tax Fraud.
If you have concerns about tax compliance or potential tax issues, contact Robert J. Fedor, LL at 440-250-9709. The firm advises clients on issues involving tax fraud, tax crime, and compliance risks throughout the U.S. and internationally.
