Have you ever stumbled upon an enticing tax loophole on social media or received an unsolicited email promising a massive refund? The tax landscape is riddled with scams that target unsuspecting taxpayers and professionals. Let’s delve into these deceptive schemes and learn how to steer clear of them.

Social media: Fraudulent form filing and bad advice

Social media has become a hotbed for circulating misleading tax information. The IRS recently identified schemes that encourage people to submit false information in hopes of obtaining a refund or credit, such as the Employee Retention Credit. For example, imagine seeing a viral post claiming you can claim a credit for working from home during the pandemic – even if you didn’t. Remember, if it sounds too good to be true, it probably is.

Online Account help from third-party scammers

Picture this: a seemingly helpful third party offers to assist you in creating your IRS Online Account at IRS.gov. Though it may appear genuine, these swindlers are after your personal information. To protect yourself, always access your account directly through the official website.

Phishing and spearphishing

Phishing scams involve fake communications that mimic legitimate organizations in the tax and financial community, including the IRS and state agencies. Unsolicited texts or emails lure victims into providing valuable personal and financial information, leading to identity theft. For instance, you may receive an email that appears to be from the IRS, urging you to update your account information to receive a refund.

Spearphishing is a tailored phishing attempt targeting a specific organization or business. Tax professionals should be particularly cautious of spearphishing, as it can result in data breaches and stolen client information.

Unscrupulous tax return preparers

While most tax preparers provide outstanding professional service, there are some shady ones to watch out for. Red flags include charging a fee based on the size of the refund or refusing to sign the return. Be wary of “ghost” preparers who prepare a tax return but won’t sign or include their IRS Preparer Tax Identification Number, as required by law. Never sign a blank or incomplete return.

Offer in compromise mills

Offers in compromise are a legitimate program to help those who can’t pay their federal tax debts. However, “offer in compromise mills” aggressively promote these offers in misleading ways to people who don’t qualify, often costing taxpayers thousands of dollars. To check your eligibility, use the free IRS Offer in Compromise Pre-Qualifier tool.

As you navigate the treacherous world of taxes, remain alert and aware of these common scams. By doing so, you’ll safeguard your money, personal information, and client data from falling into the wrong hands. Stay vigilant, and remember that knowledge is power when it comes to protecting yourself from deception.