The Dirty Dozen list from the Internal Revenue Service (IRS) is an annual service that offers a heads-up to taxpayers of hot tax crime scams. The list also alerts those involved in these frauds that the IRS is paying attention and may catch up to you soon.
Updating for 2024, here are three more prominent scams getting the attention of the IRS at present (click here for other intriguing frauds from this list):
Offer in Compromise (OIC)
An Offer in Compromise is an important option for certain taxpayers to resolve their outstanding tax liability. In recent years, OICs have become popular among scammers. So-called OIC mills market their services to unsuspecting taxpayers of all wealth levels. When you are struggling under tax debt, promises of paying pennies on the dollar on your liability sound pretty good. Scammers charge a service fee to put together an OIC, often without careful review of your finances, and submit the offer on your behalf. Taxpayers expect some relief for their money and end up with neither peace of mind nor their lost service fee.
The IRS has a free qualifying tool you can use to insert your own data and calculate how an OIC would work for you (the IRS does not retain data entered into the tool). You can quickly understand what an OIC can offer—and how it might, or might not, work for you.
Fuel Tax Credits
Fuel tax credits offered by the IRS apply only to fuel uses that do not occur on the highway. This could involve farming or agri-business. The Fuel Tax Credit rewards businesses for using or producing certain types of renewable fuels.
In reality, the credit is very limited, and filing for the credit will likely flag your return for review. Like an OIC, promoters market this credit as an opportunity to save big on your return and charge you a fee to prepare documents for you to file. Eventually, the taxpayer will need to respond to the IRS and may find they only qualify for a penalty for filing a fraudulent income tax return.
Tax Preparers
Each year, fraudulent tax preparers earn a berth in the Dirty Dozen list. So-called “ghost preparers” are pop-up service providers. Ghost preparers appear at tax time to advise taxpayers on credits for which they qualify and deductions (real or not) for which they should file. Usually charging a hefty fee to prepare and file a return, the preparer is long gone when the letter arrives announcing an IRS audit.
All businesses and consumers should be knowledgeable of the history and trustworthiness of their tax preparer—whether it is a corporate accountant or a one-time-this-year preparer. As you sign on the bottom line of any return, remember, you are liable for the information submitted on your behalf.
If you are involved in tax preparer or other type of tax fraud, speak with a reputable criminal tax attorney before next tax season rolls around.
Reach out to our criminal defense tax attorneys if you are concerned about allegations of tax crime or fraud
If concerned about compliance, speak with our tax lawyers about your situation and best options—before you reply to an audit or other correspondence from the IRS. We have offices in Chicago and Cleveland and serve clients throughout the U.S. and abroad. Call 440-250-9709 or contact us online today.
