Hello Loyal Readership!

Today I want to talk to about some tax related topics and go over an interesting publication that occurs each year from the IRS called the Dirty Dozen. This is a list they put out each year of items to be aware and things they are looking at.

Here are some of them that are interesting and you should definitely be aware of!

1. Pandemic-related scams – As we all know there have been various forms of stimulus payments and relief over the past year and half or so and there have been scammers trying to prey on people’s lack on understanding of these stimulus options. These scammers may be contacting clients about their payments or make sure they get it and are asking for financial information. This will be a common theme in this article but the IRS will never initiate contact with you via phone, text, email, social media. If someone contacts you saying they are with the IRS – delete it or don’t open it. They will only initiate contact via a letter from the IRS in the regular snail mail.

2. Unemployment fraud – along with the pandemic, many people have filed for unemployment benefits and scammers have also tried to prey on this. Scammers will try to obtain your personal information and file an unemployment claim using your data in which they will get the payment for. If you happen to receive a 1099-G form showing income from unemployment benefits – this is a tip-off of fraud that someone filed unemployment under your name. If this happens, reach out to state department to get this corrected, and don’t include this income on your actual tax return because it is not real income attributable to you.

3. Unsuspecting victims –With the pandemic, many charities need more support than normal, but people also getting calls from fake charities claiming that they need support and asking for an immediate donation. To ensure that a charity is real, you can ask any charity for their full name of their organization, their tax id number, and locate them on the IRS to site to verify their status.

4. People imitating the IRS – these people or organizations target seniors or people that don’t have English as their first language saying they need to clarify an issue and need your personal information. Again – the IRS will not contact you directly – it is fraudulent. They will only contact you via an official letter in the mail. If you do speak another language other than English, you can use Schedule LEP and you can indicate preferred language, they will send a letter in your native language.

5. Backtax consolidators – Be aware of firms saying they can help with your backtaxes. These firms can charge high up front fees, and don’t guarantee results. If you need assistance with your backtaxes or IRS payments, the IRS can offer payment plans with a relatively moderate interest rate and there aren’t fees to get it setup.

6. Ghost preparers – someone who says they will prepare a tax return for you but won’t put their name on or sign the return is someone to stay away from. This can be someone looking to initiate stimulus payment fraud, or another scam of some sort.

7. Personal information cons – impersonator calls claiming to be from the IRS about a tax lien or messaging you on social with a link to gather information about you.

8. Phishing scams – these may not be targeted at individuals but actual companies trying to get information from companies that may have personally identifiable information on people. Any company needs to be aware and trained of fake links, or emails with malware that may try to extract data from your computer that could compromise people’s data.

9. Abusive arrangements – this is about being aware of tax promoters who are promising very large tax deductions from alternative tax strategies. They could be promoting ideas lie conservation easements (investing in a piece of land that is subsequently donated), foreign country tax treaties with gray area (ie. Malta), claiming benefits you are not entitled to (R&D and green energy) even though you haven’t done them, and the IRS is aware of taxpayers getting involved in these ideas. You are legally required to include how found out about these ideas, and they won’t fly under the radar with the IRS. If it seems like you are saving too much on taxes, ad it is too good to be true, it probably is.

So in the end, this article is not meant to scare you, but rather is intended to raise your awareness of some things that could be scams in the tax world!