You might be surprised when I say that the IRS is partly designed to look out for the interests of Greater Memphis taxpayers. I admit it’s difficult to see that when they’re coming after you for one offense or another.
And, one of their jobs is to keep you informed. The yearly IRS Dirty Dozen list of tax scams is just one of the ways they do this.
Despite the cheesy name created to appeal to the pop-culture interests of taxpayers, this is actually a list you want to read – and what I want to delve into today.
A breakdown of the most common fraudulent schemes and general tax world thievery is given in this list, and while all of it is interesting to read (not something usually said about IRS publications), there are a few I want to draw your attention to.
But before I flesh those out, I also want to say…
One of the reasons this matters so much is that you are liable for anything on your tax return. This means you want someone you trust not only to prepare your return but also to help you fix or face any damage that’s already been done.
And that’s what my team and I at Memphis Consulting Group, LLC are here to do. So, schedule a time with my office so we can start getting you in good standing with the IRS:
Now back to that IRS Dirty Dozen scam list. While there are 12 on the list, I particularly want to highlight a couple of very common ones and how to spot them…
Two IRS Dirty Dozen Scams Greater Memphis Taxpayers Should Know
Our ability to manufacture fraud now exceeds our ability to detect it. — Al Pacino
This past tax season may have been one of the craziest tax seasons yet. Tax preparers are exhausted and some taxpayers are still waiting on the IRS to get its act together.
And of course, in the midst of crazy, you’ll find those ready to take advantage of the system. Now, even though the IRS is behind on things, they’re still able to spot scams when they come through. In fact, the cutely-named Dirty Dozen list is a compilation of the most common schemes the IRS has seen this year, and ones they’re keeping a close eye on.
Here’s the whole list:
- Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain
- Maltese (or other foreign) pension arrangements misusing treaty
- Puerto Rican and other foreign captive insurance.
- Monetized Installment Sales
- Pandemic related scams
- Offer in Compromise mills
- Bogus phone calls, texts, emails and online posts
- Concealing assets in offshore accounts/improper reporting of digital assets
- High-income individuals neglecting to file
- Abusive syndicated conservation easements
- Abusive micro-captive insurance arrangements
Some of these are self-explanatory (some are not), but for today, let’s hone in on the two highlighted ones sandwiched in the middle.
IRS Dirty Dozen #5: Pandemic Related Scams
It’s amazing how scams that popped up in 2020 are sticking around. (As if the pandemic didn’t leave a lasting enough mark on us all.)
Sadly, there are still people out there using the pandemic to steal money and identities from unsuspecting taxpayers. These include:
Economic impact payment and tax refund scams – Even though most eligible people received their economic impact payments (EIPs) and stimulus payments directly from the IRS (usually via direct deposit), identity thieves still try to get their hands on that money. Watch out for suspicious emails, phone calls, or text messages that ask you to click a link, supply sensitive information, or require data verification. The IRS doesn’t make contact about EIP information via any of these channels.
Unemployment fraud leading to inaccurate taxpayer 1099-Gs – Receive a form 1099-G for unemployment compensation you never received? The high unemployment numbers during the pandemic left people vulnerable to scammers filing fraudulent unemployment compensation claims using stolen personal information for anyone who did not file an unemployment claim. Contact your appropriate state agency for a corrected form.
Fake employment offers posted on social media – There’s a lot of “fake” stuff circulating out there in social media land including job postings. Scammers looking to entice the unemployed during the pandemic create fake job listings to get people to hand over their financial information. If they get their hands on that, they can use it to file a fraudulent tax return.
Fake charities that steal your money – The onset of the pandemic brought in a lot of charitable goodwill, and thieves wanting to capitalize on that created phony charities to pressure unsuspecting people into giving their money away. If you’re unsure about the charity, you can use the IRS Tax Exempt Organization Search tool to find legitimate, qualified charities to which donations may be given and are tax-deductible.
IRS Dirty Dozen #6: Offer in Compromise “Mills”
These are the late-night TV ad and radio blurb crooks promising to settle debt for “pennies on the dollar.”
They are the ones who give what we do here at Memphis Consulting Group, LLC a bad name.
The thing is, you can actually get a better deal just by directly negotiating with the IRS (especially with the right kind of help, ahem). You can even start by using the pre-qualifier tool on the IRS website to see if you’re even eligible.
And of course, we have other tools in our toolbox to help you with your IRS problems.
But if you get taken in by one of these fraudulent OIC mills … all you get is (broken, empty) promises. People have been to jail for making these promises, and tens of thousands of taxpayers have been suckered by them.
So … stay vigilant to those exploitive schemes. And that starts by working with someone who stands by their name.
Staying clear of scams and fraud can be difficult if you don’t know what to look for. This IRS Dirty Dozen list is a great informational resource to help the public stay on guard.
A few other helpful things Greater Memphis taxpayers need to know that the IRS (and its authorized private collection agencies) will never do:
– Call to demand immediate payment using a specific payment method (i.e. prepaid debit cards, gift cards, or wire transfers).
– Threaten arrest or law enforcement involvement for failing to pay.
– Demand that taxes be paid without an opportunity to question or appeal.
– Ask for financial information over the phone.
We’re here for you, and if you’re in doubt, just reach out to us.
In your corner,
Memphis Consulting Group, LLC