The Internal Revenue Service (IRS) continues to remind taxpayers of ongoing scams and identity fraud schemes featured on the 2024 Annual Dirty Dozen list. Beware if an offer sounds too good to be true or questionable! The following list of tax-related scams will continue to run rampant throughout the year. SPS/GZ takes these warnings seriously, and you should too!
- Employee Retention Credit Claims: Some of these advertisements exist solely to collect taxpayer’s personally identifiable information (PID) in exchange for false promises. Scammers use the PID to conduct identity theft.
- Phishing and smishing: The IRS initiates most contacts through conventional USPS mail and typically will not initiate contact with taxpayers by email, text or social media regarding a bill or tax refund.
- Online account help from third-party scammers: Taxpayers should always establish their own online account through IRS.gov.
- Fake Charities: Always check out a charity before donating!
- Unscrupulous tax return preparers: Taxpayers should be on the alert for common warning signs, including charging a fee based on the size of the refund. Taxpayers should never sign a blank or incomplete return.
- Social media bad advice & fraudulent form filing: Social media often circulates inaccurate or misleading tax information. The IRS has seen several examples in recent months.
- Spear-phishing and cybersecurity for business professionals: There is greater potential for harm if there is a data breach since thieves can steal a business’ client data to file fraudulent returns.
- Offer in Compromise mills: A taxpayer can check eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.
- False Fuel Tax Credit claims: The fuel tax credit is meant for off-highway business and farming use and is not available to most taxpayers. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels.
- Schemes aimed at high-income filers:
- Charitable Remainder Annuity Trust (CRAT): Irrevocable trusts allow individuals to donate assets to charity and draw annual income for life or a specific period. Promoters, advisors, and taxpayers sometimes misuse trusts to try to eliminate ordinary income and/or capital gain on the sale of the property.
- Monetized Installment Sales: In these potentially abusive transactions, promoters find taxpayers seeking to defer the recognition of gain upon the sale of appreciated property, facilitating a monetized installment sale for the taxpayer in exchange for a fee.
- Tax avoidance strategies:
- Micro-captive insurance arrangements: A micro-captive is an insurance company whose owners elect to be taxed on the captive’s investment income only. Abusive micro-captives involve schemes that lack many of the attributes of legitimate insurance. These structures often include implausible risks, failure to match genuine business needs and, in many cases, unnecessary duplication of the taxpayer’s commercial coverages.
- Syndicated conservation easements: Taxpayers may claim a charitable contribution deduction for the fair market value of a conservation easement transferred to a charity if the transfer meets the requirements of Internal Revenue Code 170. In abusive arrangements, which generate high fees for promoters, participants attempt to game the tax system with grossly inflated tax deductions.
- Offshore accounts with digital assets: Unscrupulous asset protection professionals and promoters attempt to lure U.S. taxpayers into placing assets in offshore accounts and structures falsely claiming they are out of reach of the IRS. The IRS has the ability to identify and track anonymous transactions of foreign financial accounts as well as digital assets.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology, to business clients of all sizes. We create and e-file Forms 1098-T, 1042-S, and 1099 online filing, Affordable Care Act tax forms and penalty support, and Forms 3921 and 3922. For more information, reach out to us at sales@greenzapato.com or call at (888)375-3049. Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few simple steps and we handle everything else to keep your organization compliant. Contact us today!
