The Internal Revenue Service (IRS) has released its annual "Dirty Dozen" list of top tax scams for 2024. Typically the IRS releases a new list each year to warn taxpayers and preparers alike of what to watch out for when it comes to scams and data security.
While most preparers stay vigilant about these scams and understand how the IRS properly communicates with clients, our clients can be more susceptible. Our firm received dozens of phone calls last year from clients who were being inundated with ERTC credit claims even though we knew they didn’t qualify.
One of the new additions, number 7, is even more prevalent than ever. Be careful when posting on social media to list your tax advise disclaimer as is still required under Circular 230 and be wary of your clients potentially receive advise from their favorite YouTuber.
1. Phishing and smishing: Be cautious of emails (phishing) and texts (smishing) claiming to be from the IRS. Do not click on unknown links or provide personal information.
2. Employee Retention Credit (ERC) abuse: Watch for aggressive promoters who encourage questionable ERC claims, such as claiming for too many quarters or employees.
3. IRS Online Account scams: Scammers may offer to help set up an IRS Online Account to steal personal information. Encourage clients to create their own accounts through IRS.gov.
4. Fuel Tax Credit fraud: This credit is only available for off-highway business and farming use. Be wary of promoters who create fictitious documents to claim the credit improperly.
5. Offer-in-Compromise (OIC) mills: These scams mislead taxpayers into believing their tax debts can be settled for pennies on the dollar. Inform clients that they can obtain OICs directly from the IRS for free.
6. Fake charities: Scammers may pose as charitable organizations to steal donations and personal information. Verify the legitimacy of charities before donating.
7. Social media tax advice: Be cautious of inaccurate tax advice on platforms like TikTok, which may encourage misuse of tax documents.
8. "New client" scams targeting tax preparers: Be wary of potential clients who send malicious attachments or URLs, which can compromise your computer systems and lead to fraudulent returns.
9-11. Scams targeting high-net-worth taxpayers:
- ·Art donation deductions: Promoters may encourage inflated valuations of art donations.\
- Charitable Remainder Annuity Trusts (CRATs): These trusts may be misused to eliminate capital gains.
- Monetized installment sales: Abusive tax shelters may be organized through these sales.
12. Offshore schemes: Be cautious of promoters selling bogus tax strategies and fraudulent offshore schemes designed to reduce or dodge taxes, such as syndicated conservation easements, micro-captive insurance arrangements, and foreign captive insurance.
It helps to inform your clients of the scams on this list by sharing them in a newsletter or a blog post. You can also attach the annual list to tax organizers to help your clients know what to watch out for. Keeping your clients informed not only helps to better protect their information, but it also decreases the number of questions you may receive about bogus tax strategies and helps improve e-filing issues making for a smoother tax season.
Christine Gervais
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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