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IRS SCAMS: 2018 “DIRTY DOZEN TAX SCAMS” RELEASED

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The Internal Revenue Service (“IRS”) recently released its annual list of “Dirty Dozen” tax scams for the upcoming filing season. The majority of the IRS scams in the 2018 version also appeared on the 2017 list and, not surprisingly, topping the list are identity theft, telephone scams and phishing. These scams can certainly be encountered at any time during the tax year but generally occur more frequently during filing season.

“We urge taxpayers to watch out for these tricky and dangerous schemes,” said Acting IRS Commissioner David Kautter. “Phishing and other scams on the ‘Dirty Dozen’ list can trap unsuspecting taxpayers. Being cautious and taking basic security steps can help protect people and their sensitive tax and financial data.”

THE DIRTY DOZEN

Outlined below are a few of the 2018 Dirty Dozen tax scams as identified by the IRS with a brief description of each:

Phishing Schemes

Phishing involves an unsolicited e-mail or fake website that attempts to attract potential victims to provide personal information.  Any suspicious e-mail such as this should be reported by forwarding it to phishing@irs.gov.  The IRS does not request personal information via e-mail. The IRS continues to see new and evolving phishing schemes, one of which involves a taxpayer’s bank account(s). Criminals are using real bank accounts to directly deposit funds in the taxpayer’s bank account after filing a fraudulent tax return. These criminals then use various tactics to contact taxpayers posing as IRS agents or a representative from a collection agency to have unsuspecting taxpayers then transfer funds back to the criminal. The IRS suggests Taxpayer’s review their bank accounts for any unexpected deposits to avoid falling victim to a phishing scheme.

Fake Charities

Scam groups often create fake charities and attract contributors by providing a charitable purpose and the benefit of tax deductions. With the recent natural disasters that have occurred, the IRS notes more scam artists create fake charities to try and encourage taxpayers to donate to support victims of these natural disasters. The IRS suggests that Taxpayers request the charities Federal Employer Identification Number and use the IRS “Select Check” tool to confirm the legitimacy of the charity.

Pervasive Telephone Scams

These types of scams involve individuals contacting other individuals pretending to be an IRS representative in order to attempt to steal the other’s money and/or identity.  Individuals that feel they have been subject to one of these telephone scams are instructed to contact (1) the IRS if they know they owe, or might owe, taxes; (2) the Treasury and Inspector General for Tax Administration if they don’t owe taxes; or (3) the Federal Trade Commission’s FTC Complaint Assistant in either case.

Other scams making the list of the 2018 “Dirty Dozen” include the following in which the IRS alerts taxpayers to continue to be wary of:

  • Return preparer fraud;
  • Inflated refund claims;
  • Excessive claims for business credits;
  • Falsely padding deductions on returns;
  • Falsifying income to claim credits;
  • Frivolous tax arguments;
  • Abusive tax shelters; and
  • Offshore tax avoidance.

CONCLUSION

The IRS Criminal Investigation division utilizes a nationally coordinated program to identify and investigate various tax schemes.  In addition, the IRS provides a means to report suspected tax fraud activity utilizing various IRS forms.  The information necessary to report suspected fraudulent activity can be accessed on the IRS website utilizing the following link: https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity.

The IRS has stated that the Criminal Investigation division works closely with the Department of Justice to prosecute individuals involved in these illegal activities.  In the meantime, taxpayers should be wary of any situation which appears “to good to be true” to not open themselves up to unwanted schemes.  Taxpayers should always proceed with caution and keep in mind that scams are not limited to only those identified in the Dirty Dozen.

John A. Smith, Jr. Supervisor
973-532-8875
jsmith@withum.com

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Eric Cooper
973-898-9494
ecooper@withum.com

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