The IRS, and especially its criminal investigation (CI) unit, is known for its vigilance in staying on top of the latest tax schemes and scams being concocted to illegally evade paying taxes and defraud taxpayers or the agency itself. To that end, each year, the IRS puts out a list of the “dirty dozen” biggest and most common types of tax scams that are being perpetrated throughout the country. This list serves as a warning to taxpayers not to fall for these scams, as well as to the scammers and promoters that the IRS is onto their schemes and they should cease and desist quickly, or they are going to get caught. At the Tax Law Offices of David W. Klasing, our skilled lawyers have pored over the 2020 list and are here to help you understand these scams, and how you can avoid being caught up in one of them and ending up in serious trouble.
The 2020 List
The list released this year is a bit different than the ones that have been released in the recent past, where the “dirty dozen” have mostly featured fraudulent schemes being perpetrated against the IRS, like abusive tax shelters, inflated refund claims, and excessive credit claims. This year’s list focuses more on scams targeting taxpayers during the Covid-19 pandemic and generally. However, as one article describes, “The IRS plans to unveil a similar list of enforcement and compliance priorities this year as well,” so promoters are not off the hook.
Phishing Scams
The IRS is warning taxpayers to be vigilant about “phishing” scams, where a taxpayer will receive an email or a link to a website that appears to be from the IRS. The taxpayer will then be asked to provide personal information under the guise of it being used for tax purposes. The IRS never initiates contact regarding a tax bill via email, and you should consult with a tax professional who can assess whether any contact from the IRS is legitimate before you provide any personal information or make any payments.
Fake Charities
There has been a rise during the pandemic of fake charities requesting donations and asking for personal identifying information. An actual charity group will always have an Employer Identification Number (EIN), which, if requested, can be used to verify their legitimacy.
Threatening Phone Calls
There has also been an uptick in scam artists calling individuals claiming to be from the IRS or a criminal enforcement agency and demanding that they pay their alleged overdue taxes or fines at once or face arrest and jail time. The IRS will never call to collect payment and demand it immediately. Again, it is best to consult with an experienced tax lawyer before providing anyone claiming to be from the IRS with payment or information.
Social Media Scams
Much like with phishing, scam artists use social media sites to initiate contact and pretend to be a friend, loved one, or government official who needs your information. These scams have recently begun to include tax-related identity theft more and more.
EIP or Refund Theft
Criminals this year have turned their attention to scamming people out of their Economic Impact Payment (EIP) as provided by the Coronavirus relief bill passed by Congress. Much of this stems from identity theft whereby criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.
Senior Fraud
Seniors are often more susceptible to tax scams, partially due to their advanced age and lack of familiarity with technology such as email and social media, where phishing scams take place. At the Tax Law Offices of David W. Klasing, our skilled Tax Attorneys and CPAs can work with seniors to handle all aspects of their tax and estate planning and yearly tax returns, as well as to keep them safe from scammers.
Scams Targeting Non-English Speakers
Like with seniors, non-English speakers are unfortunately a highly-targeted group when it comes to tax scams. Those not familiar with the English language should seek the advice of a tax professional before responding to any alleged IRS inquiries.
Unscrupulous Return Preparers
Unfortunately, many tax preparers commit fraud unbeknownst to the taxpayer they are supposed to be working for, leading to trouble for the taxpayer who thought they were signing a well-prepared and accurate return. By hiring an experienced and reputable Tax Attorney and CPA like those at our firm, you can rest assured that you will not be exposed to this issue.
Offer in Compromise Mills
The IRS does indeed have an “offer in compromise” program where some taxpayers can end up having their tax debts significantly reduced. However, there are promoters out there over-selling this program and charging fees to submit applications for taxpayers who will never qualify. Consulting with a tax attorney can quickly help you understand whether or not an offer in compromise is a possibility in your case.
Fake Payments with Repayment Demands
This is a newer scheme where a criminal steals your identifying information and files a false tax return leading to a big refund. When the refund hits your account, they will call you and pose as an IRS agent demanding immediate repayment directly to them and threatening you with criminal charges. Anytime you get a call like this, you should do nothing until you have spoken to a lawyer.
Payroll and HR Scams
These are similar to the phishing scams described above but designed to target payroll information, such as Business Email Compromise (BEC) and Business Email Spoofing (BES) scams.
Ransomware
This is a highly technical crime where an individual gains access to your computer system and locks down your files and information until you provide them with a ransom payment. They often demand payment in virtual currency like Bitcoin to remain anonymous. Anytime you face a situation like this, you should contact law enforcement authorities right away.
The above are just some of the tax schemes that criminals are perpetrating against taxpayers. If you believe you have been the target of one of these scams or otherwise could have been unintentionally caught up in one, never send information or payment to someone claiming to be an IRS agent without consulting with a reputable tax professional first. To set up a reduced rate initial consultation, call our office today at (661) 432-1480 or schedule online today.
Questions and Answers for Criminal Tax Representation
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- Failure to keep records or supply information
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