The Internal Revenue Service (IRS) Dirty Dozen list is an annual event—a concise list of the most common scams challenging taxpayers today.
Let’s take a look at the illegal gambits that are sufficiently hazardous and harmful to make the list in 2023. In no particular order, here they are:
- False fuel credits: Agricultural and farming interests can take advantage of the off-highway fuel tax credit—standard taxpayers cannot. Unscrupulous tax preparers and others routinely promote the fuel credit as a way to earn a larger tax refund. Instead, tax returns that claim a fuel tax credit are generally flagged for follow-up. When the IRS notifies the taxpayer, their credit is denied, while the tax preparer is long gone with exorbitant fees and often, a stolen identity, in hand.
- Fraudulent charities: Fake charities have been around a long time, ticking up when natural or other tragic disaster strikes. Scammers steal money and identities. Give generously—after you determine if the charitable organization is qualified as tax-exempt by the IRS.
- Beware social media and Offer in Compromise (OIC) Mills: Social media is a common tool for bad actors hawking too-good-to-be-true schemes to earn a larger refund (for a fee). Social media also figures prominently in advertising questionable services for people with significant debt to the IRS. OICs are a tool that can be helpful to those with a large tax liability—but too often taxpayers end up paying a fee for an OIC application that will be of no help at all.
- Offshore accounts and high-income scams: The IRS drew attention this year to schemes and scams to hide assets in foreign bank accounts, cryptocurrency, and secrecy jurisdictions. As well, Charitable Reminder Trusts and monetized installment sales were flagged on the Dirty Dozen list this year.
- Tax evasion and tax preparers: Tax avoidance strategies and crooked tax preparers go hand-in-hand. The IRS details several avoidance strategies while perennially calling attention to the danger of disreputable tax preparers.
- Internet scams aimed at tax professionals and online scammers: Tax pros work hard for their clients and even harder to avoid social engineering scams over the internet, telephone, and text that are aimed at soaking up the personal and financial details of their clients. The IRS also highlighted schemes around tax time, when phishing attempts increase and scammers posing as online help for taxpayers proliferate.
The Dirty Dozen list is a heads-up to consumers about the very real scams to which anyone can fall prey. If you think a deal is too good to be true—it probably is. Think twice or three times before you hand over information to anyone else, or click on that tempting link in your email. Talk to trusted associates and your tax lawyer if you are offered a too-attractive deal. No one ever regrets due diligence.
Do you need experienced legal help with a controversy or possible bankruptcy? We can help
The tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about taxes, failure to file tax returns, or your offshore assets. We serve local and international clients from offices in Chicago and Cleveland. Call 800-579-0997 or reach out to us today.