IRS Concludes Its Dirty Dozen Tax Scams List for 2023

The Internal Revenue Service (IRS) has issued an urgent reminder to taxpayers, businesses, and tax professionals to stay vigilant against the annual Dirty Dozen list of tax scams throughout the year, not just during tax season. These scams typically peak during tax filing season as individuals prepare their tax returns, but can occur all year round, as fraudsters continuously look for new ways to steal money, personal information, and data.

To help people guard against these scams, the IRS and the Security Summit partners have released an overview that recaps this year’s Dirty Dozen scams. IRS Commissioner Danny Werfel warned that scammers are consistently inventing new tactics to steal information from taxpayers. He advises people to avoid sharing sensitive personal data over the phone, email, or social media, and to remain skeptical if a tax deal seems too good to be true.

Since 2015, the Security Summit, a collaborative effort between the IRS, state tax agencies, and the nation’s tax industry, including tax professionals, has been warning people about common scams and schemes during tax season and beyond that can increase the risk of identity theft. The Security Summit initiative is committed to protecting taxpayers, businesses, and the tax system from scammers and identity thieves.

The 2023 Dirty Dozen list includes a mix of new items and returning scams. While the list is not a legal document or a formal listing of agency enforcement priorities, it serves to alert taxpayers and the tax professional community about various scams and schemes.

Some of the most notable scams on the 2023 Dirty Dozen list include:

Employee Retention Credit claims

Taxpayers should be aware of aggressive pitches from scammers who promote large refunds related to the Employee Retention Credit (ERC). These schemes often involve promoters advertising on radio and the internet, touting refunds involving Employee Retention Credits based on inaccurate information related to eligibility and computation of the credit.

Phishing and smishing

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 the states. Unsolicited texts (smishing) or emails (phishing) lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft.

False Fuel Tax Credit claims

The fuel tax credit is designed for off-highway business and farming use, and as such, is not available to most taxpayers. However, unethical tax return preparers and promoters are enticing taxpayers to inflate their refunds by erroneously claiming the credit.

Fake charities

Bogus charities become a larger problem whenever a crisis or natural disaster occurs. Scammers set up these fake organizations to take advantage of the public’s generosity, seeking money and personal information, which can be used to exploit victims through identity theft further.

Unscrupulous tax return preparers

Most tax preparers provide outstanding and professional service. However, people should be careful of disreputable tax professionals and watch for common warning signs, including charging a fee based on the size of the refund.

Schemes with international elements

The IRS continues to scrutinize attempts to hide assets in offshore accounts and accounts holding digital assets, such as cryptocurrency. They also warn against Maltese individual retirement arrangements misusing tax treaties and Puerto Rican and foreign captive insurance scams.

Taxpayers are encouraged to be cautious of suspicious offers and always consult reputable tax professionals for advice. By remaining informed and proactive, taxpayers can help stop these scams and protect their personal information and finances from being exploited.

This article, "IRS Concludes Its Dirty Dozen Tax Scams List for 2023" was first published on Small Business Trends