TOP SEVEN OF THE MOST COMMON TAX SCAMS AND SCHEMES

Employee Retention Credit Claims: Taxpayers should be aware of aggressive pitches from scammers who promote large refunds related to ERC.  This warning follows blatant attempts by promoters to con ineligible people to claim the credit.

Phishing and smishing Taxpayers and tax professionals should be alert to fake communications from those posing as legitimate organizations in the tax and financial community, including the IRS and the states. These messages arrive in the form of an unsolicited text (smishing) or email (phishing) to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft.

Online account help from third-party scammers:  Swindlers pose as a “helpful” third party and offer to help create a taxpayer’s IRS Online Account at IRS.gov. In reality, no help is needed. The online account provides taxpayers with valuable tax information. But third parties making these offers will use this as an opportunity to steal a taxpayer’s personal information. Taxpayers can and should establish their own online account through IRS.gov.

Fake Charities:  Bogus charities are a continuing problem that gets bigger whenever a crisis or natural disaster strikes. Scammers set up fake organizations to take advantage of the public’s generosity. They seek money and personal information, which can be used to further exploit victims through identity theft.  Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

Unscrupulous tax return preparers:   Taxpayers should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. A major red flag or bad sign is when the tax preparer is unwilling to sign the dotted line. Avoid these “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law. Taxpayers should never sign a blank or incomplete return.

Social media: Fraudulent form filing and bad advice:  Social media can circulate inaccurate or misleading tax information, and the IRS has recently seen several examples. These can involve common tax documents like Form W-2 or more obscure ones like Form 8944. While Form 8944 is real, it is intended for a very limited, specialized group. Both schemes encourage people to submit false, inaccurate information in hopes of getting a refund.

Offer in Compromise mills:  Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But “mills” aggressively promote Offers in Compromise in misleading ways to people who clearly don’t meet the qualifications, frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool

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