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IRS Tax TipsMay 1, 2024

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Issue Number:  Tax Tip 2024-42

Taxpayers and tax pros: Beware of these common tax scams

Taxpayers and tax professionals should remain alert and aware of these common scams, schemes and cons to avoid losing money, personal information or client data.

Social media: Fraudulent form filing and bad advice Social media can circulate inaccurate or misleading tax information, and the IRS has recently seen schemes that encourage people to submit false, inaccurate information in hopes of getting a refund or taking advantage of a credit, such as the Employee Retention Credit. Taxpayers should always remember that if something sounds too good to be true, it probably is. Taxpayers can follow the IRS on X (formerly Twitter) with @IRStaxsecurity for help avoiding common scams that could put their money and information at risk.

Online Account help from third-party scammers Swindlers pose as a “helpful” third party and offer to create a taxpayer’s IRS Online Account at IRS.gov. The scammers making these offers are trying to steal a taxpayer’s personal information. Taxpayers should access their account directly through IRS.gov. Phishing and spearphishing Taxpayers and tax professionals should be alert to fake communications 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 or email to lure victims into providing valuable personal and financial information that can lead to identity theft.

Spearphishing is a tailored phishing attempt targeting a specific organization or business. Tax professionals need to be very careful about spearphishing because of the risk of a data breach. A successful spearphishing attack can ultimately steal client data and the tax preparer’s identity, allowing the thief to file fraudulent returns.

Unscrupulous tax return preparers Most tax preparers provide outstanding and professional service. However, people 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 as required by law. Taxpayers should never sign a blank or incomplete return.

Offer in compromise mills Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts for less than the full amount owed. But offer in compromise “mills” make exaggerated claims with ads about settling tax debts inexpensively. They can aggressively promote Offers in Compromise in misleading ways to people who clearly don’t meet the qualifications. These “mills” often charge excessive fees, costing taxpayers thousands of dollars for a service they could have gotten directly from the IRS. A taxpayer can check their eligibility for free with the IRS Offer in Compromise Pre-Qualifier tool.

Employee Retention Credit scams Some unscrupulous promoters have misrepresented eligibility rules for the Employee Retention Credit, luring well-intentioned businesses to claim the credit when they don’t qualify. The IRS is highlighting seven suspicious signs and urging businesses to seek a trusted tax professional to resolve an incorrect claim if they need to.

With ERC compliance work expanding, the IRS reminds businesses to quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.

 

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