The Dirty Dozen

Email phishing scam

Taxpayers and tax professionals should be alert to fake communications from those posing as legitimate organizations in the tax and financial community, including the IRS and state agencies and tax software companies. These messages arrive in the form of an unsolicited text (smishing) or email (phishing) to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft. The IRS initiates most contacts through regular mail and will never initiate contact with taxpayers by email, text or social media regarding a bill or tax refund.

Bad social media advice

Social media platforms routinely circulate inaccurate or misleading tax information, including on TikTok where people share wildly inaccurate tax advice. Some involve urging people to misuse common tax documents like Form W-2. Only follow trusted social media advice from the IRS, tax professionals and other reputable sources.

IRS individual Online Account help from scammers

Swindlers pose as a “helpful” third party and offer to help create a taxpayer’s IRS Online Account at IRS.gov. In reality, no help is needed. The online account provides valuable tax information. But third parties making these offers will try to steal a taxpayer’s personal information this way. They can sell the information or use the sensitive details to file fraudulent tax returns, obtain loans and open credit accounts. Taxpayers should establish their own online account through IRS.gov.

Fake Charities

Bogus charities are a perennial problem that can intensify whenever a crisis or natural disaster strikes. Scammers set up fake organizations to take advantage of the public’s generosity. They seek money and personal information, which can be used to further exploit victims through identity theft. Taxpayers who itemize deductions might be able to claim a deduction on their federal tax return for money or goods given to a charity, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

False Fuel Credit claims

This past year, taxpayers were misled into believing they were eligible for the Fuel Tax Credit. This credit is meant for off-highway business and farming use and is not available to most taxpayers. Unscrupulous tax return preparers and promoters, including people on social media, continue enticing taxpayers into inflating their refunds by erroneously claiming the credit. The IRS urges taxpayers to ensure they are properly claiming the credit.

Credits for Sick Leave and Family Leave

This specialized credit is available for self-employed individuals for 2020 and 2021 during the pandemic; the credit is not available for later tax years. Taxpayers are using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.

Bogus self-employment tax credit

Information is being circulated on social media falsely advising taxpayers to claim a non-existent “Self-Employment Tax Credit”. Promoters market it as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period. Inaccurate information is being pushed that suggests many people qualify for the tax credit and payments of up to $32,000 when they do not, similar to what was done for the Employee Retention Credit.

Improper household employment taxes

Taxpayers “invent” fictional household employees and then file Schedule H (Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.

The overstated withholding scam

This scheme circulating on social media encourages people to fill out Form W-2, Wage and Tax Statement, or other forms like Form 1099-NEC and other 1099s with false income and withholding information. Scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding. Taxpayers should always file a complete and accurate tax return. Only use legitimate information returns, such as an employer issued Form W-2, to complete returns correctly.

Misleading Offers in Compromise

This program helps people settle their federal tax debts when they are unable to pay in full. Unscrupulous “mills” use aggressive marketing to make false claims of guaranteed settlements for “pennies-on-the-dollar,” or will say there’s a limited window of time to resolve tax debts through the IRS Offer in Compromise (OIC) program. Taxpayers should always check to see if they qualify for the program and are eligible to file.

Ghost tax return preparers

Taxpayers should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. Avoid “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law.

New client scams and spear phishing

This “new client” scam involves spear phishing attempts that target tax pros. Cybercriminals impersonate new, potential clients to trick tax professionals and other businesses into responding to their emails. Once the tax pro responds, the scammer sends a malicious attachment or URL that can compromise the preparer’s computer systems and allow the attacker to access sensitive client information. Businesses and individuals, including tax pros, should always be cautious and look out for any suspicious requests or unusual behavior before sharing any sensitive information or responding to an email.

If you have any questions or concerns about any these scams, please reach out to your tax professional.

The list is not a legal document or a literal listing of agency enforcement priorities. It is designed to raise awareness among a variety of audiences that may not always be aware of developments involving tax administration.