How to Avoid IRS Tax Scams: Stay Informed, Stay Secure

At Carolina Business Services, we understand the importance of protecting your hard-earned money. The IRS warns taxpayers of deceitful schemes, including unsolicited calls, texts, and online messages. These scams aim to induce panic, coercing victims into divulging sensitive information, leading to identity theft and financial loss. This guide summarizes the IRS Dirty Dozen for 2023. Insights are provided to help you steer clear of IRS tax scams and keep your financial well-being intact.

Spotting the Deceptive: Be Wary of Official-Looking Communications

Scammers excel at creating seemingly official communications. It may take years to rectify the aftermath and recover lost funds. IRS Commissioner Chuck Rettig advises, "If you are surprised or scared by a call or text, it's likely a scam, so proceed with extreme caution. I urge everyone to verify a suspicious email or other communication independently of the message in question."

Unmasking IRS Scam Tactics and How to Guard Against Them

Staying One Step Ahead: The IRS Unveils The 2023 Dirty Dozen

Every year, the IRS unveils "The Dirty Dozen" online – a compilation of the most egregious tax scams. This valuable resource serves as a beacon to keep taxpayers informed and vigilant. You empower yourself to recognize and thwart potential threats by staying updated on the latest scams. Knowledge is your best defense against those seeking to compromise your financial security.

Let's break down the IRS 2023 Dirty Dozen key points:

 1. Employee Retention Credit Claims: Be Wary of Overpromises

Beware of scammers promoting hefty refunds tied to the Employee Retention Credit (ERC). Bad actors entice ineligible individuals to claim the credit, often through misleading radio and internet ads. Stay cautious, as falling prey to these schemes may lead to identity theft.

2. Phishing and Smishing: Guard Against Fake Communications

Stay alert to fake communications posing as legitimate entities, including the IRS and state agencies. Phishing (via email) and smishing (via text) aim to extract personal and financial information. Remember, the IRS primarily communicates through regular mail, not via email or text.

3. Online Account Assistance Scams: Protect Your Personal Information

Be wary of third parties offering unnecessary help in creating an IRS Online Account. Creating an IRS account is straightforward. Seeking unnecessary assistance may put your personal information at risk. Establish your online account directly through IRS.gov. The IRS official details are offered in a PDF file.

4. False Fuel Tax Credit Claims: Know the Eligibility Criteria

The fuel tax credit is designed for specific business and farming uses. Unscrupulous actors may encourage taxpayers to claim the credit erroneously. Be cautious and ensure your claims align with the intended purpose of the credit.

5. Fake Charities: Verify Before Donating

In times of crisis, beware of bogus charities seeking to exploit generosity. Verify the legitimacy of charitable organizations to prevent falling victim to scams. Remember, legitimate donations are deductible only when made to qualified tax-exempt entities recognized by the IRS.

6. Unscrupulous Tax Return Preparers: Watch for Red Flags

While most tax preparers are trustworthy, be cautious of those charging fees based on refund size. Steer clear of "ghost" preparers who refuse to sign or provide their IRS Preparer Tax Identification Number (PTIN). Your tax preparer's transparency is crucial.

7. Social Media Misinformation: Exercise Caution

Misleading tax information circulates on social media. Be skeptical of advice related to standard tax documents like Form W-2 or obscure ones like Form 8944. If something seems too good to be true, exercise caution and verify information from reputable sources.

8. Spearphishing and Cybersecurity: Protect Client Data

Tax professionals must remain vigilant against spearphishing, tailored attempts to breach specific organizations. The IRS highlights the potential harm of data breaches, emphasizing the importance of safeguarding client data.

At Carolina Business Services, we understand the paramount importance of safeguarding your financial information. Our commitment to your security goes beyond offering insightful guidance on avoiding tax scams. We employ stringent measures to protect client data, ensuring the confidentiality and integrity of your sensitive information. Our advanced cybersecurity protocols and dedicated professionals work tirelessly to create a secure environment, providing you with peace of mind as you navigate the intricate landscape of tax matters. Trust Carolina Business Services – where your financial security is not just a priority but an integral part of our unwavering commitment to your success.

9. Offer in Compromise Mills: Exercise Caution

While Offers in Compromise provide relief for federal tax debts, be cautious of aggressive promotion by "mills." These entities may mislead individuals who don't meet qualifications, resulting in unnecessary expenses. Utilize the IRS Offer in Compromise Pre-Qualifier tool to assess eligibility. https://irs.treasury.gov/oic_pre_qualifier/

10. Schemes Aimed at High-Income Filers: Know the Risks

Understand the risks associated with schemes like Charitable Remainder Annuity Trust (CRAT) and Monetized Installment Sales. Exercise caution when engaging in potentially abusive transactions, as they may not align with legitimate tax strategies.

11. Bogus Tax Avoidance Strategies: Avoid Micro-Captive Insurance Abuses

Steer clear of abusive micro-captive insurance arrangements that lack the attributes of legitimate insurance. Similarly, be cautious of syndicated conservation easements that may result in grossly inflated tax deductions.

12. Schemes with International Elements: Stay Informed

The IRS continues to scrutinize offshore accounts and digital assets. Ensure compliance with tax regulations, as assertions of assets being out of reach are inaccurate. Be cautious of international arrangements, such as Maltese individual retirement arrangements, which may exploit tax treaties improperly.

The IRS Dirty Dozen publication is available at www.irs.gov/newsroom/dirty-dozen

Key Facts: Genuine IRS Communication

The IRS communicates primarily through letters, never via phone, email, or social media for personal or financial information. Bills for owed taxes are typically mailed. Always make checks payable directly to the U.S. Treasury and avoid third-party payments. How to Know if it is Really the IRS: https://www.irs.gov/newsroom/how-to-know-if-its-really-the-irs

Follow these best practices to protect yourself:

• Pressure Signals A Scam: Be wary of high-pressure tactics.
• Verify and Call Back: Ask for a case ID and call back using a verified IRS number.
• Bypass Suspicious Links: Go directly to websites instead of clicking on suspicious links.
• Email Verification: Check the actual email address and hover over hyperlinks to verify URLs.
• Guard Personal Information: Never share personal details via email, phone, or text.
• Monitor Your Tax Record: Utilize the IRS online tool to keep track of your tax record. Get your official IRS Transcript: https://www.irs.gov/individuals/get-transcript

Final Thoughts: Your Role in Tax Scam Prevention

As a taxpayer, you play a crucial role in preventing tax scams. Stay informed, exercise caution, and rely on reputable tax professionals. Remember, you are legally responsible for the accuracy of your tax returns. By staying vigilant, you contribute to the collective effort to thwart deceptive schemes. Your financial security is paramount – let's work together to protect it.

In Conclusion: Fortifying Your Financial Confidence with Carolina Business Services

Carolina Business Services stands as your unwavering partner in the intricate landscape of tax matters. Armed with insights on avoiding IRS tax scams and equipped to guide you through potential threats, our commitment to your financial well-being remains steadfast.

Remember, vigilance is key. By staying informed and adopting best practices, you empower yourself against evolving scams. From identifying deceptive communications to resisting scare tactics, our seasoned tax consultants are here to lend a helping hand whenever you need it.

Don't navigate the complexities alone. Whether you face a potential scam or simply seek reliable tax services, reach out to us. Trust in Carolina Business Services – where your financial security is a priority and our passion. Call now, and let us empower you on your journey to financial confidence!