05/25/2023 in Accountant

The IRS has released its list of tax scams for 2023.

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The IRS has released its list of tax scams for 2023. Here are the key scams taxpayers should be cautious about:

1. Aggressive Employee Retention Credit Claims: Scammers promote large refunds related to the Employee Retention Credit, targeting ineligible individuals.

2. Phishing and Smishing: Fake communications, such as emails or text messages, impersonate legitimate organizations like the IRS to deceive recipients into revealing personal information or taking immediate action.

3. Fraudulent Online Account Setup: Scammers pose as helpful third parties to trick taxpayers into providing personal information while setting up online accounts. Taxpayers should set up their accounts themselves or consult trusted professionals for assistance.

4. False Fuel Tax Credit Claims: Scammers try to persuade taxpayers to claim the fuel tax credit, which is only applicable to specific off-highway business and farming use.

5. Fake Charities: Scammers set up fake charities, especially after disasters, to exploit people’s generosity and gather personal and financial data for tax-related identity theft.

6. Unscrupulous Tax Return Preparers: Taxpayers should choose tax professionals carefully, avoiding those who make unrealistic promises or refuse to sign returns.

7. Social Media Misinformation: Taxpayers should be cautious of tax scams on social media that aim to falsely inflate tax refunds.

8. Spearphishing and Cybersecurity for Tax Pros: Tax professionals should be vigilant against targeted phishing attempts, as a data breach could have significant consequences due to the sensitive information they handle.

9. Offer in Compromise Mills: Misleading companies charge excessive fees while promising taxpayers they can settle tax debts for significantly less than owed through offers in compromise.

10. High-Income Filer Schemes: Unscrupulous tax preparers may encourage taxpayers to engage in inappropriate tax strategies, such as misusing Charitable Remainder Annuity Trusts (CRATs) and monetized installment sales.

11. Bogus Tax Avoidance Strategies: The IRS warns against abusive practices involving micro-captive insurance arrangements and syndicated conservation easements that aim to exploit tax deductions.

12. International Schemes: The IRS focuses on uncovering attempts to conceal assets in offshore accounts and digital assets like cryptocurrency. Taxpayers should be aware that the IRS can track and identify these transactions.

Taxpayers should be cautious and seek guidance from reputable tax professionals while being aware that they are legally responsible for the information on their tax returns. The IRS is actively investigating and targeting individuals involved in these scams.