The IRS completed the “Dirty Dozen List” for 2023 and while there were a few hold-outs from previous years, there were several new warnings in the offering for 2023.
The first warning focused upon the aggressive promotion of claiming Employee Retention Credit and the risk of scammers, basically warning if it’s too good to be true it probably is. The second of the Dirty Dozen was a warning to be wary of phishing emails and other scams attempting to pose as the IRS. The IRS will always initiate contact with a US taxpayer through the US mail and almost never through email, texting or social media. This is especially true regarding either a newly calculated refund or an overdue bill to the IRS. The third warning in series focused upon scammers who attempt to gain personal information through a “sale” or offer to help set up an “online account with the IRS. The focus of the scammers in this scheme is identify theft.
The IRS completed the “Dirty Dozen List” for 2023 which contained additional warnings such as #4 which warned US taxpayers to beware of scammers and promoters “pushing improper fuel tax credit claims” which most taxpayers don’t qualify to claim. After claiming the US taxpayer qualifies for a “fuel tax credit” the scammer seeks extensive fees while stealing financial and personal information. The fifth scam in the “Dirty Dozen” focused on the use of a fake charity to fool US taxpayers into donations. This was especially true after major disasters such as the flooding and tropical storms in California earlier this year as well as the fire in Maui. The IRS warned of “heart-wrenching” emails preying upon the good intentions of US taxpayers who want to help. The scammers again aren’t just stealing money, but personal and financial information of the taxpayer. The sixth warning in the series focused upon how to avoid “shady tax preparers” while identifying qualified, experienced tax preparers and professionals.
The seventh warning in the “Dirty Dozen” focused upon the use of social media to lure US taxpayers into revealing personal and financial information through “tax advice” about specific forms, including the W-2 or Form 8944 (which is very focused upon a specific type of taxpayer). The IRS warns taxpayers to beware of “fraudulent form filing and bad advice on social media.” The 8th message urged US tax professionals and businesses to avoid suspicious “spearfishing” email scams. The fictitious email often includes the IRS logo and calls to action such as “Action Required: Your account has now been put on hold.” The IRS warned professionals and businesses to avoid clicking on links within any e-mail, and to verify requests with the supposed “original sender” (or client) prior to responding with information year-round, not just during tax season. The 9th warning listed focused upon “so-called Offer in Compromise mills” that promise to settle IRS tax debt for “pennies on the dollar.” The IRS warns US taxpayers not to be fooled as most don’t qualify for these programs and offerors charge heavy fees for information which is free from the IRS. The IRS offered a helpful link for US taxpayers who wis to check their eligibility for an Offer in Compromise through the IRS’s Offer in Compromise Pre-Qualifier tool.
The IRS completed the “Dirty Dozen List” for 2023 with warnings 10 through 12 focused upon various schemes. The 10th in the “Dirty Dozen List” warned US taxpayers with high income to be suspicious of and seriously investigate questionable tax practitioners who promote Charitable Remainder Annuity Trusts and monetized installment sales. While these can be valid strategies for some US taxpayers, they should beware of “abusive transactions of this type” who misuse these vehicles to reduce taxable income or capital gains. The misapplication of these vehicles may defer the payment of taxes but can place a US taxpayer in a position of potential tax fraud. Chapter 11 of the “Dirty Dozen” focuses upon “Bogus tax avoidance strategies” such as abusive micro-captive insurance arrangements, syndicated conservation easements, the use of individual retirement arrangements in Malta as well as Puerto Rican or other captive insurance involving a US taxpayer who owns a business interest in a foreign entity. This missive also warned against offshore accounts and digital assets reminding those who attempt to “conceal offshore banks, brokerage accounts, digital assets” and other income using tax avoidance schemes can be easily identified by the IRS and will face stiff criminal and financial penalties. The final warning served as a wrap up of the Dirty Dozen list urging US tax preparers and taxpayers to remain vigilant, even after the completion of the tax season.
The primary purpose of the “IRS Dirty Dozen List” is to provide insights and warnings into current tax schemes and poor practices which can compromise the personal and financial information of US taxpayers and/or expose them to criminal or financial penalties as well as an IRS audit.
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