IRS Announces The 2021 Dirty Dozen List Of Tax Schemes

Every year, the IRS announces its list of common tax schemes that it has encountered and is focusing its efforts on enforcing. This year, the tax agency created four categories for its usual “Dirty Dozen,” including:

  • Pandemic-related scams
  • Personal information scams
  • “Ruses focusing on unsuspecting victims”
  • Scams involving abusive structures
    The IRS announced the specific tax schemes in each of these categories over several days at the end of June and beginning of July. The announcement puts taxpayers on notice that if they have been involved in any of these schemes, or if they are uncertain if they have been reporting their taxes properly, they should take action now by calling an experienced Phoenix tax attorney to become compliant.

    IRS Announces The 2021 Dirty Dozen List Of Tax Schemes

    Pandemic-Related Scams

    The IRS has identified two common scams related to the pandemic. The first involves people trying to steal economic impact payments. The IRS has warned taxpayers to beware of any text messages, phone calls, emails, or letters that might ask about bank data or might invite taxpayers to go to a link to get more information about the payment. Taxpayers are also warned to check mail frequently to minimize the risk of someone stealing a paper check, as well as to beware of sharing personal information such as social security numbers.
    The other common tax scheme related to the pandemic involves businesses filing fraudulent unemployment claims. Some businesses are using personal information to claim unemployment expenses. Taxpayers are warned to be on the lookout for 1099-G forms reporting unemployment compensation that they didn’t receive.

    Personal Information Scams

    Scams attempting to get personal information from taxpayers continue, as do scams targeting tax professionals. The IRS says that there has been a rise in tax professionals receiving emails about e-filing in an effort to steal Electronic Filing Identification Numbers (EFINs) and Centralized Authorizations File (CAF) numbers. There has also been a rise in scammers sending tax professionals emails asking if they are taking on new clients and then sending a corrupted attachment or link that is supposed to go to their tax documents. Instead, the tax professional gets a virus on their computer or the scammer uses the link to collect sensitive information.
    Phishing scams targeted at taxpayers continue, as well. The IRS warns taxpayers not to click on links sent by email or to share personal information with anyone who calls or texts pretending to be an agent with the IRS. The agency reminds taxpayers that official communications usually are sent by mail, not by email or phone. If the IRS is asking for payment, it will direct taxpayers to the website or provide a payment address that can be verified online. IRS agents will never ask for personal or financial information by email or text.

    Ruses Focusing On Unsuspecting Victims

    Many scams are designed to take advantage of vulnerable or unsuspecting people, such as immigrants and the elderly. For example, a scammer might call an immigrant and claim to be an IRS agent and threaten deportation if taxes are not paid. The IRS reminds taxpayers, as above, that contact will usually come through mail, and that agents will not ask for personal or financial information.
    Other scams targeting unsuspecting people including fake charities, offer in compromise mills, unemployment insurance fraud, and unscrupulous tax preparers. The IRS warns taxpayers that scammers can set up fake charities to avoid tax obligations. Offer in compromise mills involve charging people hundreds or thousands of dollars for fake or inflated promises of being able to get them an offer in compromise from the IRS for their tax debt. Always go to a reputable and experienced Phoenix tax attorney to work out an offer in compromise or other negotiation.

    Scams Involving Abusive Structures

    The IRS identified several scams involving abusive structures, including:

  • Syndicated conservation easements, which involves using an inflated appraisal of undeveloped land to take an unwarranted tax deduction
  • Abusive micro-captive arrangements, which create insurance coverage that the business doesn’t need and charge excessive premiums to create tax credits or deductions
  • Abuse of the U.S.-Malta tax treaty, which involves the sale of appreciated property to Maltese pension plans
  • Improper claims of business credits
  • Improper monetized installment sales, which involves purchasing property with an installment note and delaying tax recognition of the property

    Hire An Experienced Phoenix Tax Attorney

    Some of these IRS tax schemes involve unscrupulous people trying to take advantage of taxpayers or steal their information. However, many of them involve strategies that taxpayers themselves may use to try to avoid their tax obligations. There are serious legal penalties for participating in these or other tax schemes, including significant fines, high interest, and possibly even jail time.

    If you have participated in any of these abusive practices identified by the IRS, or if you have questions about your tax obligations, contact Silver Law PLC to talk to one of our experienced tax attorneys and learn about your legal options. We’ll help you understand how tax law applies to your circumstances, and we’ll help you understand your options if you know that you have run afoul of your obligations. We may be able to audit old returns, negotiate a settlement for you, or more. Contact us today to schedule a consultation with a tax lawyer and learn more.


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