‘Dirty Dozen’: IRS highlights common tax scams

April 11, 2023

Tax season might be nearly over for many people and businesses, but that doesn’t mean that scammers are taking a break.

The IRS recently released its annual “Dirty Dozen” tax scams. The list features increasingly common and creative ways that fraudsters seek to steal money, personal information or data.

The experts at Honkamp, P.C. can help you identify and avoid the “too good to be true” options. Connect with us to receive financial peace of mind and legitimate ways to boost your business.

Below are brief summaries of the “Dirty Dozen” provided by the IRS. (You can find more in-depth explanations from the agency here.)

• Employee Retention Credit claims: Scammers continue to aggressively promote large refunds related to that federal credit and to con ineligible people to claim it. Many times, the scheme is a way to steal people’s identities.
• Phishing and smishing: Scammers posing as “legitimate organizations in the tax and financial community, including the IRS” and specific states, use unsolicited emails (phishing) or texts (smishing) to get victims to hand over financial info. A reminder: The IRS will never reach out via email, text or social media regarding a tax refund or a bill.
• Online account “help”: Scammers will reach out to offer to help create an online account at IRS.gov for an individual or business. Again, this is just a way to steal your information. Anyone can set up their own account at IRS.gov – no “help” needed.
• False fuel tax credit claims: The fuel tax credit is legitimate, but it’s meant for off-highway business and farming use. The IRS reports that ineligible taxpayers are being pushed to file for it.
• Fake charities: Scammers continue to set up fake charities, particularly online in the wake of natural disasters or other crises. In addition to stealing your donations, fake charities can help scammers obtain your financial information.
• Unscrupulous tax return preparers: These preparers give a bad name to upstanding tax experts, like those at Honkamp. Be wary if they charge a fee that’s based on the size of your refund or if they won’t sign the tax return with their name and IRS number, as required by law.
• Social media advice: The tax advice and tips found on social media are littered with inaccurate information and false, “to good to be true” claims. Connect with a Honkamp expert for tax advice – not some random video on TikTok or page on Facebook.
• “Spearphishing” and cybersecurity: The IRS defines “spearphishing” as “a tailored phishing attempt to a specific organization or business,” in which emails or text messages seek to get people to provide personal info. All people can be targets, but scammers sometimes hone in on people with access to larger amounts of financial information this time of year.
• “Offer in compromise” trouble: “Offers in compromise” can help people settle their federal tax debts, but there are some “mills” out there that push them, even to those that don’t qualify. That can cost taxpayers thousands of dollars, according to the IRS. Check your eligibility using the IRS Offer in Compromise Pre-Qualifier tool.
• High-income filers targeted: Two schemes flagged by the IRS that target high-income individuals are connected to Charitable Reminder Trusts and monetized installment sales, respectively. Make sure you’re working with a trusted financial expert on such matters.
• Bogus tax avoidance strategies: The IRS also highlighted two bogus tax avoidance strategies. The first relates to micro-captive insurance arrangements, while the second relates to syndicated conservation easements. 
• International schemes: The IRS continues to find people who try to conceal income in offshore banks, digital asset accounts and other places. The agency also is uncovering people who attempt to avoid U.S. taxes by contributing to foreign individual retirement arrangements in Malta or other countries.

As always, if you have tax questions, reach out to your Honkamp advisor and stay out of hot water with the IRS.