The most trending tax and financial industry issues.

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Lane Keeter, CPA

Partner: Tax Consulting, Estate Planning, and Heber Springs Managing Partner

IRS Dirty Dozen – 2022 Edition – Round Two

This week we continue in our series regarding the recently issued IRS "Dirty Dozen" tax scams. Last time, we discussed numbers one thru four on the list. This week we'll highlight numbers five thru seven.

Number five of the Dirty Dozen is a sad reminder, as the IRS put it, that scammers are still using the COVID-18 pandemic to steal people's money and identities. These hazards can arise from within social media, emails, texts, and telephone calls, and such scams have proliferated during the pandemic.

"Caution and awareness are our best lines of defense against these criminals" who steal tax refunds, IRS Commissioner Charles Rettig was quoted as saying. Here are some things the thieves are trying and at which, unfortunately, are all too often successful:

Economic impact payment and tax refund scams

It's important to note that the IRS has issued all authorized EIPs, also known as stimulus payments, and that most eligible taxpayers have already received them. There simply are no more. Some tell-tale signs of an EIP scam include any text message, unexpected phone call, or email that asks a taxpayer to provide or verify bank account information. 

The IRS does not initiate taxpayer contact by phone, email, text, or social media asking for a Social Security number or other personal or financial information, the IRS said, repeating a frequent caution. Also, be alert to mailbox theft. Routinely check your mail and report suspected mail losses to postal inspectors.

Unemployment fraud and inaccurate Forms 1099-G

A Form 1099-G, Certain Government Payments, reporting unemployment benefits a taxpayer did not receive, or more benefits than received, may be evidence that someone fraudulently filed for state unemployment benefits using your personal information. If affected, you should contact your appropriate state agency for a corrected form. More information on state reporting of unemployment fraud is available at the U.S. Department of Labor's website.

Bogus employment offers

Job postings on social media may be fake, and a lure to entice taxpayers to provide their personal and financial information.

Fake charities

Sadly, as the need for assistance has grown during the pandemic, so have fake charity scams. Red flags include a caller who exerts pressure for a donation, as well as a request to pay a donation by gift card or wire. Be sure you know to whom you are giving.

In number six on the list The IRS cautioned taxpayers with tax bills to contact the IRS directly and not go to unscrupulous tax companies that use local advertising to falsely claiming they can resolve unpaid taxes for pennies on the dollar. 

Common ruses include:

Offer in Compromise (OIC) mills

A taxpayer with IRS debt can legitimately enter into an OIC with the IRS to pay an agreed amount based on the taxpayer's calculated ability to pay a larger tax debt. "OIC mills" make exaggerated claims that they can settle with the IRS for "pennies on the dollar", but then charge huge fees, often in the thousands of dollars. Promoters may even encourage filing an OIC application that they know is ineligible.

"No one can get a better deal for taxpayers than they can usually get for themselves by working directly with the IRS to resolve their tax issues," IRS Commissioner Charles Rettig said in the release.

'Ghost' preparers and inflated refunds

The IRS noted that paid income tax preparers are required by law to sign the returns they prepare for compensation and to include on the return their valid preparer tax identification number (PTIN). You should be wary of preparers who won't sign the returns they prepare, often referred to as ghost preparers. For e-filed returns, the "ghost" will prepare the return, but refuse to digitally sign as the paid preparer. Don't do business with such preparers; they are up to no good, including generating fraudulent refunds that they then use your identity to steal.

Suspicious Communications

For the seventh item on the list, the IRS notes that thieves are looking to file a fraudulent refund claim by using your information, and may attempt to steal your information by using tactics such as posing as an IRS representative. If such information is obtained by the criminals, they can quickly use it to file a fake tax return in hopes that it has not already been used to file a return for that tax year. 

If this happens to you, it is likely you may not know about the theft until you attempt to file a legitimate return that gets rejected by the IRS. This very thing happened to a client of mine just this year, and he and I both can attest to the incredible trouble this causes, not to mention hassle factor.

Fraudsters use bogus text messages, so called email "phishing" scams and even phony telephone calls in which they "spoof" the caller ID, all in an attempt to make you believe it is the IRS you are dealing with so you will hand over your valuable information. 

As I've said many times before, JUST SAY NO to such attempts, as they will NEVER be from the actual IRS. The one exception to this that I can think of is that the IRS will use a text message as a second factor to authenticate users' identity when they access online self-help tools, but only after the user has entered valid login information on the IRS's website.

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