Benjamin Franklin wasn't quite correct. There are three constants in life: death, taxes, and tax scams.
For more than two decades, the Internal Revenue Service has annually highlighted the 12 worst recent scams. This year's Dirty Dozen includes questionable tax arrangement touted by con artists, pandemic-related schemes to steal people's identities and refund money, dubious tax payment options, and unscrupulous tax preparers.
For the last few years, the IRS has shifted from a single list of a dozen tax scams to multiple alerts with more details on the various scams. Those new releases are this weekend's Saturday Shout Outs, listed below in order in which they were issued.
- IRS warns taxpayers of "Dirty Dozen" tax scams for 2022. (June 1) The schemes that kicked off the 2022 tax scam Dirty Dozen were four potentially abusive transactions that are wrongfully promoted and will likely attract additional IRS compliance efforts in the future. They are charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales.
- IRS continues with Dirty Dozen this week, urging taxpayers to continue watching out for pandemic-related scams including theft of benefits and bogus social media posts. (June 6) Yes, we're still coping with COVID-19, which means criminals still are using the coronavirus, often COVID economic impact payments, as hooks to try to steal people's money and identity. This isn't a surprise, since COVID-19 tax-related scams topped last year's Dirty Dozen list. And as in 2021, the coronavirus-focused crooks still are using, among other things, bogus emails, social media posts, and unexpected phone calls. For those who lost jobs due to COVID business protection protocols, some scammers use online fake job boards or bogus charities to target identity theft victims. Some crooks even used stolen personal info to apply for legitimate employment benefits, leaving the real taxpayers to face the tax consequence of job-loss benefits they never sought or received.
- IRS urges anyone having trouble paying their taxes to avoid anyone claiming they can settle tax debt for pennies on the dollar, known as OIC mills. (June 7) The IRS does offer a real Offer in Compromise, or OIC, program to help people who can't pay their full tax bills pay as much as they can. Criminals know this and their fake OIC mills make outlandish claims, usually in local advertising regarding how they can settle a person's tax debt for pennies on the dollar. The reality usually is that taxpayers pay the OIC mill a fee to get the same deal they could have gotten on their own by working directly with the IRS. The con artists contort the IRS program into something it's not, misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.
- Scammers use every trick in their communication arsenal to steal your identity, personal financial information, money and more. (June 8) Criminals have used all forms of suspicious communications to either trick, surprise, or scare someone into responding before thinking through their actions. Through bogus phone calls, texts, emails, and posts online, scammers attempt to gain victims' trust or scare them into providing sensitive personal financial information, money, or other information. The criminals then use that info to file false tax returns to claim fraudulent refunds, or tap into financial accounts.
- IRS, Security Summit reiterate recent warning to tax professionals and other businesses of dangerous spear phishing attacks. (June 9) Individual taxpayers aren't the only tax con targets. If crooks can get into tax professionals' accounts, they then have access to a trove of personal information on their clients, widening their identity and tax theft options. Spear phishing is one way criminals go after tax pros. It is an email scam that attempts to steal a tax professional's software preparation credentials. Spear phishing can be tailored to attack any type of business or organization, so everyone needs to be on the lookout and not rush to act when receiving a strange email. "Tax professionals generally relax a little after filing season and many take a well-deserved vacation, but don't let your IT defenses down," said IRS Commissioner Chuck Rettig. "Spear phishing remains one of the biggest threats to the tax industry and other client-based enterprises."
- IRS wraps up 2022 "Dirty Dozen" scams list; agency urges taxpayers to watch out for tax avoidance strategies. (June 10) As the financial world has expanded, so have tax schemes. In this final collection of 2022's Dirty Dozen tax scams, the IRS focuses on those tax tricks used by crooks who have wealthier taxpayers in their sites. These scams involve offshore tax havens for cryptocurrency and improper reporting of digital assets, abusive syndicated conservation easements, and sketchy micro-captive insurance arrangements. Also, if you're a wealthy taxpayer, don't fall for a con artist's spiel that not filing a return is a smart move. It's not, regardless of your income. And the federal failure to file penalty is initially much higher than the failure to pay punishment.
Just click on the bold-faced IRS announcement titles in the above list. They are links that will take you to the tax agency's full releases that have even more information on all of this year's Dirty Dozen tax scams.
Remember, tax scams don't stop when the main tax season ends on Tax Day. Crooks sometimes can find easier targets once folks aren't paying that much attention to their taxes.
So know the tactics that tax con artists use and don't become one of their victims, any time of the year.
You also might find these items of interest:
- Gift cards are great gifts, but not a way to pay taxes
- Online tax scammers keep the scares coming year-round
- If you missed Tax Day, file and pay by June 14 to avoid larger penalties
- All of Don't Mess With Taxes' posts on scams and identity theft