Tax Season Scams
Tax Day for 2024 (April 15th) is swiftly approaching. During tax season you should remain vigilant in identifying and combatting prevalent IRS scams. Fraudsters will pose as IRS agents, government agencies and debt collectors attempting to deceive individuals into sending money for fictitious fees, taxes and/or penalties. Read below for more information on popular fraudulent schemes and scams.
- Unclaimed Refund Fraud Schemes
It is crucial to realize that if a situation seems too good to be true, it probably is! A common scam during tax season involves an individual receiving mail that falsely claims they’re entitled to additional or unclaimed tax refunds. These letters may appear to be very official. Typically, such letters will often ask for personal and sensitive information such as a copy of your driver’s license, your social security number, bank account information and other personal data. Fraudsters may use this information to commit tax-related crimes and identity theft.
- Donation and Charity Fraud Schemes
Charitable contributions and/or donations can often times serve as a tax write off, qualifying as deductible expenses. However, it is vital to remain vigilant as fraudsters may impersonate charitable organizations to deceive individuals into donating. Contributions made to fraudulent entities do not qualify as deductible expenses, nor do they support genuine charitable causes or foundations. Often these scammers will ask for quick payments or payments in unconventional forms such as gift cards. To verify an organizations tax-exempt status, individuals can utilize the IRS Tax Exempt Organization Search Tool .
- Employee Retention Credit (ERC) Fraud Schemes
Business owners should be weary regarding fraudulent schemes related to Employee Retention Credit (ERC). The Employee Retention Credit was introduced during the Pandemic as an incentive that businesses could qualify for. Fraudsters may exploit this by attempting to persuade business owners to apply for credit, while the fraudster attempts to steal tax information or to make money by charging businesses fees for application assistance. ERC fraud has become so prevalent that the IRS has established an ERC withdrawal program for individuals concerned they may have submitted a false claim, offering a solution without the victims having to face penalties.
- Ghost Tax Preparer Fraud Schemes
Federal Law mandates that all compensated tax preparers must possess a Preparer Tax Identification Number (PTIN). Professional tax preparers are required to sign the prepared Tax Returns and provide their PTIN. Beware of unethical tax return preparers that are referred to as “Ghost Preparers.” Ghost Preparers are likely to require cash only payments, engage in fraudulent practices to illegitimately qualify clients for tax benefits, and will also refuse to sign the prepared returns. Individuals that encounter these abusive tax preparers are advised to report them to the IRS.
For more information on Tax Fraud, Alerts and Reporting Suspected Tax Fraud Activity to the Internal Revenue Service visit Tax fraud alerts | Internal Revenue Service (irs.gov).
04.01.2024