The Internal Revenue Service (IRS) has released its annual “Dirty Dozen” list of tax scams, marking the 22nd year of identifying the most prevalent and dangerous schemes that taxpayers should avoid. IRS Commissioner Danny Werfel emphasized the persistent efforts of scammers to obtain sensitive financial and personal information, leveraging various technologies, tax incentives, and current events to deceive individuals and tax professionals.
Here are the top tax scams for 2024:
- Phishing and Smishing:
- Scammers bombard taxpayers and preparers with fraudulent emails (phishing) and texts (smishing) to trick recipients into clicking malicious links, providing personal information, or downloading malware.
- Avoid clicking on unknown links, attachments, or unsolicited messages claiming to be from the IRS.
- Employee Retention Credit (ERC) Scams:
- Promoters aggressively push questionable ERC claims, exploiting businesses’ efforts to survive the pandemic. Common red flags include too many calendar quarters claimed, incorrect calculations, and false reporting of paid wages.
- Be wary of aggressive ERC promoters and verify eligibility through legitimate channels. Although the deadline to file 2020 returns has passed, you may still be notified of opportunities to claim for 2021. Don’t be fooled by promises of large credits.
- Fraudulent Online Account Setup:
- Scammers trick taxpayers into believing they need help setting up an IRS Online Account, then steal personal information to file fraudulent returns and claim refunds.
- Set up your IRS Online Account independently via IRS.gov.
- Improper Fuel Tax Credit Claims:
- Fraudsters mislead taxpayers into claiming the Fuel Tax Credit, which is only available for off-highway business and farming use. Scammers create fake documents and receipts for fuel use.
- Only claim the Fuel Tax Credit if legitimately eligible.
- Offer-in-Compromise (OIC) Mills:
- Disreputable companies charge high fees to falsely promise taxpayers that they can settle their tax debts for pennies on the dollar.
- Seek OIC services directly from the IRS or a trusted tax professional.
- Fake Charitable Organizations:
- Scammers set up fake charities, especially after natural disasters, to steal donations and personal information.
- Verify the legitimacy of charitable organizations before donating.
- Misleading Tax Advice on Social Media:
- Social media platforms, particularly TikTok, spread inaccurate tax advice, sometimes encouraging misuse of tax documents.
- Verify tax advice through reliable sources and consult with a qualified tax professional.
- “New Client” Scams Targeting Tax Professionals:
- Scammers pose as potential clients, sending malicious emails with attachments or URLs that can compromise tax preparers’ computer systems.
- Be cautious with new client inquiries and avoid opening suspicious attachments or links.
- Art Donation Deductions:
- Promoters encourage wealthy taxpayers to buy and donate art at inflated values, promising large deductions.
- Ensure proper valuation and documentation for art donations.
- Misuse of Charitable Remainder Trusts (CRATs):
- Scammers exploit CRATs to eliminate capital gains improperly.
- Use CRATs only as intended and seek advice from a trusted tax advisor.
- Monetized Installment Sales:
- Shady deals designed to defer gain recognition from property sales through abusive shelters.
- Avoid complex and questionable tax shelters.
- Fraudulent Offshore Schemes:
- Promoters sell bogus tax strategies and offshore schemes, including syndicated conservation easements, micro-captive insurance arrangements, and stashing assets in foreign accounts.
- Avoid illegal offshore tax strategies and report foreign accounts as required by law.
By staying informed about these scams and remaining vigilant, you and your tax professional can better protect your sensitive information and avoid falling victim to fraudulent schemes. For more detailed information https://www.irs.gov/newsroom/dirty-dozen.
