The IRS Issues Update to the Tax Scams to Be Aware of For 2023 and Beyond

When it comes to income taxes, two things tend to be true every year. The first is that April will always roll around yet again, whether you like it or not - which means that it's in your best interest to make sure your tax filing needs are accounted for. The second is that with this period of the year always comes scammers and other people with malicious intentions who want to do you harm.

Over the years, the IRS has issued clear guidance on how to help people avoid getting scammed in an inherently vulnerable state. Nobody from the IRS will ever contact you out of the blue by telephone or email to demand money, for example. If you legitimately owe something (or if the government thinks you do), you'll be contacted via the United States Postal Service.

But at the same time, scammers are nothing if not sophisticated. One must be proactive about staying vigilant or else you might fall directly into their trap. That's part of what the IRS wants to help people do, as they've recently issued an update to what they call the "Dirty Dozen" tax scams that people and entrepreneurs need to be aware of.

The Dirty Dozen Tax Scams: Breaking Things Down

As the name implies, the IRS' "Dirty Dozen" is an annual list of the common tax-related scams that people may encounter at some point throughout the year. They especially increase in prominence as the filing season approaches. Not only do they put people at risk of losing critical money, but they could also compromise someone's personal information, their data, and much more.

As a hard and firm rule, it is recommended that people never share sensitive personal information with someone over the phone, via email, or on social media. The lion's share of these scams depends on people not realizing this simple truth in order to be successful.

The Scams to Watch Out For

One of the scams that the IRS is warning people about for 2023 and beyond has to do with aggressive claims as they relate to the Employee Retention Credit. At some point, you may have heard a promotion on the radio or seen an ad online from someone claiming that they can help you save a tremendous amount of money on your taxes by way of the Employee Retention Credit.

Unfortunately, they're almost always based on inaccurate information regarding who is eligible to even take the credit in the first place, how much money you can get in the way of a credit if you are, or likely both at the same time.

Phishing and smashing are also two techniques that are on-the-rise recently. This involves a situation where fake communication has begun between a taxpayer and someone who is posing as a legitimate organization in the financial community. It could involve getting a call from someone claiming to be from the IRS, from what sounds like a legitimate tax preparation service, or a similar type of entity.

If these messages arrive in the form of a text message you didn't sign up for or weren't expecting, that's called smishing. If they come in the form of an email, that's called phishing. Regardless, they're little more than a social engineering attempt to try to get someone to provide personal and financial information that will almost always be then used to steal someone's identity.

Additional Tax Scams to Watch Out For

Another common type of tax credit scam takes the form of the "False Fuel Scam." This targets businesses that may have vehicles or other equipment that are used for official purposes. Scammers will promise taxpayers that they can get bigger refunds than they were expecting by claiming yet another credit that they probably aren't eligible for in the first place.

If you are eligible for the Credit for Federal Tax Paid on Fuels, you can claim it by filling out Form 4136. If anyone tells you differently, they're likely trying to take advantage of you.

One sad type of tax-related scam that people should be aware of has to do with fake charities. Certainly, this is nothing new - someone calls you up to try to get you to donate money to help with disaster relief or a similar cause, only to never use the money you send for those purposes.

However, recently scammers have begun trying to get both money and personal information. So not only are you out some hard-earned income from someone just trying to take advantage of you, but you could also be opening yourself up to a case of identity theft as well.

Also keep in mind that if you do donate to a charity (or to an organization that you think is a legitimate charity), you can only claim the donations if they're going to a qualified tax-exempt organization. Indeed, simply asking such a caller about their status could be a good way to weed out some of the illegitimate organizations that may be trying to contact you, to begin with.

Other examples of scams that the IRS wants to make people aware of this year include but are not limited to ones like:

Situations where an unknown third party reaches out to try to help you with your IRS Online Account.
Untrustworthy tax preparers who want to take advantage of you.
Bad advice that you see on social media.
"Offer in Compromise" mills that aren't actually acting on behalf of the IRS or associated with it in any way.

If nothing else, these and other tax scams underline the importance of making sure that your taxes are handled appropriately by someone who knows what they're doing. If you don't feel comfortable doing so yourself (and especially if you have taxes that are complicated or if you're a business owner, you shouldn't), you'll want to do your due diligence to make sure you're getting help from a professional you can trust.

Not only will they help make sure that your taxes are filed correctly, but they can also spot these scams more easily to help you avoid them - which for many people is the most important benefit of all.

The IRS Issues Update to the Tax Scams to Be Aware of For 2023 and Beyond

Want tax & accounting tips and insights?

Our Office

Our Additional Locations

San Jose Office

Palo Alto Office

San Francisco Office

San Diego Office