The Internal Revenue Service (IRS) is offering a combination of services and guidance to help taxpayers avoid costly scams and schemes this tax filing season.
Partnering with the Coalition Against Scam and Scheme Threats (CASST), the IRS recently announced steps it was taking to help taxpayers and tax professionals avoid becoming victims of tax fraud. The IRS announced the formation of CASST in August 2024, to bolster efforts by the IRS to educate consumers and fight criminal tax evasion. Along with the IRS, the coalition is comprised of finance and software companies, state agencies, and a national tax professional association.
New Forms and Initiatives
For this tax season, the coalition developed new forms and initiatives which include:
- Closer review of “Other Withholding” claims on Form 1040: Line 25C of Form 1040 gives taxpayers the opportunity to identify other types of withholding that may arise out of a variety of sources, including foreign residency, gambling winnings, and corporate partnerships. Avoid delays in processing your return by attaching your supporting documentation when you file the return noting “Other Withholding.”
- Tax identification numbers: Tax preparers are required to put their preparer tax identification number (PTIN) on the returns that they prepare. Services to better protect PTINs and electronic filing identification numbers (EFIN) are in development.
- Fuel Tax Credit—a new statement to tell right from wrong: Fuel tax credits are big business but actually apply to a small group of taxpayers. The credit is aimed at supporting renewable fuels for off-highway uses like agriculture. Unfortunately, unscrupulous preparers of tax returns often write the credits into tax returns to boost the refund, and usually, their fee. CASST developed a new statement that must be filled out along with Form 4136 and attached to Form 1040. The statement offers the low down on the fuel credit to help taxpayers understand their tax credit eligibility and avoid a tax audit on their return.
- Fighting Ghosts: The IRS is continuing to get the word out about dubious tax return preparers. This year the agency will send informational letters to taxpayers who have filed tax returns that may have been prepared and filed by “ghost preparers.” These would be preparers who did not sign the form or provide their required PTIN. Ghost preparers who file fraudulent tax returns are usually long gone with their fee in hand by the time you get a letter from the IRS. There are many IRS audit triggers—do not let your tax return be one of them.
Gather Your Documentation to Defend Against Possible Federal Tax Crimes
Along with this guidance, the IRS also reminds taxpayers to gather documentation before preparing a return or providing it to a preparer or accountant. Report all income—including gig work and income earned through digital platforms, like the sale of goods and services. File electronically to speed up your tax return.
And as always—regardless of who prepares your tax return—check the math and accuracy of your income, deductions, and tax credits before you sign on the bottom line. You are responsible for whatever it says in your return.
Secure Expert Tax Law Guidance
As tax laws become increasingly complex and tax scams more sophisticated, ensuring you have the right guidance is crucial. If you encounter any uncertainties or issues with potential tax fraud, seeking expert legal advice can make all the difference. Robert J. Fedor, Esq., L.L.C. specializes in dealing with tax fraud and evasion, providing authoritative legal representation to help you navigate these challenges. Contact us at 440-250-9709 or set up a consultation for reliable counsel. We offer services to clients in Northeast Ohio, Chicago, New York, and internationally.
Alternatively, if you're looking to deepen your understanding of tax scams and how to avoid them, consider downloading our informative eBook, Understanding Tax Fraud. This guide offers detailed insights into recognizing and avoiding fraudulent schemes to protect your financial interests.
