Warning: IRS Scams

It’s no secret, scammers have been around for centuries. From the “Nigerian Prince” scam and Ponzi scheme to the most recent cryptocurrency scams, no one is safe from scammers. In fact, the first recorded case of a scam goes back to 300 BC! Hegestratos and Zenosthemis, two Greek sea merchants, were caught committing fraud by taking out a bottomry, an insurance policy on their ship and cargo, in the hopes of becoming rich. The merchants’ plan of course failed, and history labeled them as the first scammers. As technology advances, so does the amount of scams, including IRS scams. Here is a quick overview of some of the Internal Revenue Service’s 2023 Scams and tips on how you can avoid being scammed!

Employee Retention Credit Claim (ERC)

Due to the harsh effects of the pandemic, Congress introduced the Employee Retention Credit (ERC) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The ERC offered refundable tax credits to employers that “paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022”. This of course opened the door to scammers looking to make a quick buck!  

The IRS warned taxpayers of scammers promoting large refunds related to the Employee Retention Credit (ERC). Scammers aggressively promote the credit and con taxpayers into filing the form with inaccurate information. These scammers then use the collected personally identifiable information to conduct identity theft!

Phishing and Smishing Scams

Fraudulent text messages, phone calls, voicemails, and other technology applications are more common now than ever. Scammers use technology to send fake, urgent tax notices, refunds, or debt collections in order to collect personal and financial information and commit identity theft. Do not fall prey to scam artists trying to trick victims into providing personal and financial information. The IRS will never call, text or send unsolicited emails requesting the collection of a tax debt. Be aware and when in doubt, ignore the message’s contact information; look up the IRS, tax professional or organization’s correct contact information and contact them directly.

IRS Online Account “Assistance”

The IRS allows taxpayers to access their individual tax information by creating an IRS online account (business taxpayers click here). The account provides taxpayers with access to their tax records, payments, communication preferences, and much more! Unfortunately, scammers take this opportunity to lure victims into using their services to “help” them create this account, and thus stealing the taxpayer’s personal information. Don’t fall victim to these tactics. The account is simple to set up, however, if you or someone you know needs assistance setting up an online account, consult Lance CPA or another trusted tax professional.

Fundraiser or Fraud?

Charitable contributions are a popular tax deduction for both individuals and corporations. Individuals may deduct qualified charitable contributions of up to 100% of their adjusted gross income, while corporations can deduct up to 25%, with any excess being carried forward to the next tax year. Charity scams are also a popular scam used by many con artists. Scammers use fake or legitimate organizations to solicit donations and may even provide fake tax-exempt forms. The money and personal information can then be used to exploit victims of further theft.

The “Ghost” Tax Preparer

A “Ghost” Tax Preparer may sound like a quick Halloween costume for an accountant. However, Ghost tax preparers are one of the many fraudulent tax preparers that provide unethical tax services. They may promise big tax refunds, but refuse to sign returns, enter incorrect tax information, or base their fees based on the refund you receive. Have you seen a “Ghost” tax preparer? Scare away these shady preparers and report them to the IRS!

Taxes are Trending?

Taxes may never make the top ten “Favorite Topic” trend, but it is in the top trending list of a scammer. Social media is often used by scammers to share inaccurate or misleading tax information. Similar to previous scams, this scheme promises refunds and big tax savings using various IRS income tax forms that are uncommon or rarely used by most taxpayers. Providing personally identifiable information in social media can lead to identity theft.

Don’t fall victim to tax scams! The IRS warns taxpayers to remember, “If something sounds too good to be true, it probably is”. 

Click here to contact Lance CPA today and receive trusted tax advice and services. 

 

Sources:

https://www.irs.gov/newsroom/irs-wraps-up-2023-dirty-dozen-list-reminds-taxpayers-and-tax-pros-to-be-wary-of-scams-and-schemes-even-after-tax-season

https://www.fraud.com/post/the-history-and-evolution-of-fraud#:~:text=While%20they%20are%20associated%20with,on%20their%20ship%20and%20cargo.