Tax season may be over but tax scams happen all year round. Recently the IRS released their Dirty Dozen tax scams list and it may be helpful to know what these scams are and what to look out for. Fraudsters tend to target the elderly, however, any person is susceptible to scams. We broke down the scams into five categories listing all 12.
Abusive Agreement Scams
The IRS listed four abusive transactions that taxpayers should look out for. These are the first four of the dozen they noted. These cons involve:
- Fake charitable remainder trusts
- Maltese pension plans
- Foreign captive insurance
- Monetized installment sales
Get more details about these individual abusive agreement scams. The IRS noted, that “taxpayers can help stop these arrangements by relying on reputable tax professionals they know they can trust.”
Related Article: Tax Scams to Watch Out For Post Tax Season
The newest type of scam comes as a result of the pandemic. These scams targeted those seeking financial assistance in a turbulent time. Scammers tend to go after the most vulnerable people during difficult times. Pandemic scams include:
- Economic Impact Payment (EIP) / Tax refund scams
- Unemployment fraud (inaccurate 1099-Gs)
- Fake employment offers on social media
- Fake charities collecting money
Phony Tax Preparers
Companies that make bogus claims to settle a person’s debt for a low price have given tax preparers a bad reputation. These Offer in Compromise or OIC “mills” trick taxpayers by sending a letter in the mail to resolve tax issues. They file a taxpayer’s return which is inaccurate and causes more trouble than it would have been to work with the IRS.
This easy-out option may be tempting. “Ghost preparers” are people who aggressively promote bigger refunds if you use them. You can avoid falling into this tax scam by hiring a tax preparer and asking them for their Preparer Tax Identification Number (PTIN). Paid preparers must sign and provide this number to file any returns.
Related Article: A Guide to Tax Filing for Seniors
Scammers have used communication through letters and phone calls for years. What you should know is that the IRS will never call you to alert you of a mistake on your tax return. Below are several scams related to suspicious communications to look out for.
- Phone scams (calls, text messages)
- Email phishing scams
The IRS does communicate through letters, but if you need to reference any letters you have received, check the document number online at IRS.gov.
Spear Phishing Scams
Last but not least are spear phishing scams, which target prominent individuals and businesses and organizations. Fraudsters will do anything to steal your information to file fake tax returns. These messages are curated to go after you or businesses so take caution opening links in suspicious emails asking for personal or financial information.
Do you have a question about your last tax return? Schedule time with Marcia L. Campbell, CPA.
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As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services, including elder & financial care, court & trust accountings, as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.