IRS SCAM ALERT SIGNThe IRS has released a list of it’s “Dirty Dozen” scams effecting tax payers this year. The top 5 scams on this list some old scams we have seen before and some new ones. These scams cost the government and tax payers every year in both time and dollars so it’s important that you know what they are and how to avoid them.

  • The first scam involves scammers who create fake organizations to take advantage of the public’s generosity. “They especially take advantage of tragedies and disasters, such as the COVID-19 pandemic,” IRS said. (It’s a good idea to check the IRS Tax Exempt Organization Search tool before making a donation to an organization before making a donation.)
  • The second scam relates to immigrant/senior fraud. “These scams are often threatening in nature,” According to the IRS impersonation scam falls within this category. This is where a targeted taxpayer receives a phone call supposedly from IRS and is threatened with jail time, deportation or revocation of a driver’s license. (The best way to handle these calls is to hang up, if you are worried that the call might be real call the IRS on it’s published taxpayer assistance number.) The IRS does not threaten taxpayers with jail and they will never ask for payment by credit or gift card.
  • The third scam on the list of dirty deeds is Offer in Compromise “mills,” IRS said. “Offer in Compromise mills contort the IRS program into something it’s not – misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars,” According to IRS, taxpayers should be especially wary of promoters who claim they can obtain larger offer settlements than others or who make misleading promises that IRS will accept an offer for a small percentage. “We’re increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for ‘pennies on the dollar,'” said IRS Commissioner Charles Rettig.
  • The fourth scam involves unscrupulous tax return preparers. “Taxpayers should be wary of preparers who won’t sign the tax returns they prepare, often referred to as ghost preparers,” IRS said. For e-filed returns, the “ghost” prepares the return but refuses to digitally sign as the paid preparer. The bag of tricks used by unscrupulous tax return preparers also includes the following: requiring payment in cash only without providing a receipt; inventing income to qualify their clients for tax credits; claiming fake deductions to increase the size of a refund; and directing refunds into their bank account instead of the taxpayer’s account.
  • The fifth scam relates to unemployment insurance fraud. As described by IRS, “unemployment fraud often involves individuals acting in coordination with or against employers and financial institutions to get state and local assistance to which they are not entitled.” The agency warned states, employers and financial institutions to be aware of the variety of scams related to unemployment insurance, including: identity-theft fraud; employer-employee collusion fraud; misrepresentation of income fraud; fictitious employer-employee fraud; and insider fraud.