Kaitlyn L. MarianoWith the 2024 tax filing season upon us, now is a great time to remind taxpayers to stay vigilant and watch out for bogus tax strategies and schemes. Now more than ever, bad actors are employing sophisticated tactics to exploit unsuspecting individuals. When the Internal Revenue Service (IRS) catches on to a fraudulent scheme, it is often the taxpayer who bears the consequences of these actions, including penalties and audits.
While tax scams are not new, advancements in technology and the increased number of online platforms have made it easier for scammers to spread false information. As tax scams and misinformation continue to rise, the IRS “Dirty Dozen” list for 2024 portrays the common tactics used that put taxpayers at risk.
1. Phishing and Smishing Scams: Scammers use emails (phishing) and text messages (smishing) to impersonate the IRS, tricking taxpayers into revealing their personal and financial information. The IRS does not initiate contact via email, text or social media. Taxpayers should be cautious of unsolicited messages claiming to be from the IRS.
2. Questionable Employee Retention Credit (ERC) Claims: Fraudulent promoters continue to encourage ineligible businesses to file improper ERC claims, resulting in audits and penalties. Due to widespread fraud, the IRS has suspended new ERC claims.
3. IRS Online Account Scams: While IRS online accounts provide a convenient way to manage tax information, scammers often pose as helpful third parties offering to “help” set up these accounts. In reality, they use this ruse to steal personal information and gain unauthorized access.
4. False Fuel Tax Credit Claims: Taxpayers are often misled by unscrupulous promoters or tax advisors regarding Fuel Tax Credits for off-highway business and farming use. Scams involving fake documents or fuel receipts are used to generate false claims in exchange for large fees.
5. Offer In Compromise (OIC) “Mills”: You’ve likely heard ads on the radio or television of companies promising to make your IRS debt disappear. OIC eligibility requirements can be restrictive, and scammers often charge excessive fees for false promises and unrealistic results.
6. Fake Charities: Scammers exploit taxpayer generosity by creating fake charities to obtain money and sensitive personal and financial information. Natural disasters and tragic events are commonly used to contact and target sympathetic taxpayers.
7. Untrustworthy Tax Preparers: Taxpayers seeking large, often bogus, tax credits and refunds are prime targets for “ghost preparers.” These scammers appear at tax time, charge excessive fees for promises of large refunds and disappear before the consequences are dealt by the taxpayer.
8. Social Media Tax Scams: Misleading and inaccurate tax information can be found on all social media platforms. Taxpayers are lured into taking improper tax positions in return for large refunds or credits, potentially resulting in significant civil and even criminal penalties.
9. Spearphishing Attacks: Identity thieves, posing as potential clients, email tax professionals looking for ways to gain access to sensitive data and into their network systems. Scammers use stolen data to file fraudulent tax returns to obtain fictitious refund claims. Reputable tax professionals will have safeguards and security to combat these illicit attempts.
10. High-Income Filer Schemes: Taxpayers can fall victim to illegal deduction schemes aimed at high-income taxpayers looking for aggressive tax reduction strategies. Be wary of tactics that may seem too good to be true.
11. Bogus Tax Avoidance Strategies: The IRS has targeted two key areas of abuse: the improper use of syndicated conservation easements and micro-captive insurance arrangements. These areas have been subject to abuse and exploitation, promptingCongress to pass legislation restricting conservative easement transactions.
12. International Element Schemes: Misuse involving offshore accounts is under high scrutiny. Specifically referenced were individual retirement accounts in Malta or other countries, claiming improper income exemptions under tax treaties. Another schemeinvolves hiding digital assets in foreign accounts touted as untraceable or undiscoverable to avoid U.S. taxation.
The IRS continues to crack down on abusive transactions and schemes, and taxpayers should remain cautious to avoid falling for them. By staying vigilant, taxpayers can protect themselves from these scams and ensure a smooth and secure tax filing season in 2025.
Kaitlyn L. Mariano, CPA, is a tax senior manager at Dannible & McKee, LLP, a Syracuse-based public accounting firm that has been delivering expert tax, audit, accounting, valuation and consulting services since 1978. For more information on this topic, contact Kaitlyn atkmariano@dmcpas.com. To learn more about Dannible & McKee, please visit DMCPAS.COM.
