The IRS Is Surprisingly Hip to and Alerts Consumers to Tax Scams

Mark Hake

The IRS just released an overview of what it calls the "Dirty Dozen" top tax scams on consumers during 2022.

The key thing that the IRS says is this: " The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. Recognize the telltale signs of a scam."

Top Scams

It listed the 5 top scams to watch out for. It begins with potentially abusive complicated arrangements that filers are knowingly or induced to enter into.

1 - 4. These four arrangements are difficult to understand, which could be why they are used. But here is the list, so that if your advisor is recommending you consider doing any of them, be very careful. The IRS is almost for sure going to audit your return"

  • 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.

5 - 8 - Pandemic Related Scams. These include:

  • Economic Impact Payment and tax refund scams
  • Unemployment fraud leading to inaccurate taxpayer 1099-Gs
  • Fake employment offers posted on social media
  • Fake charities that steal your money

9 - 11 Suspicious Communications - This list includes the typical text message scams, email phishing scams, and phone scams including recorded messages. The IRS goes through all the different types of these scams in its dirty dozen list.

12 Spear Phishing Scams. These are done by criminals trying to steal client data and tax preparers' identities to file fraudulent tax returns for refunds. They target specific groups.

The IRS is surprisingly hip to the level of detail of scams that many fraudsters are heaping on consumers.

In fact, there is a separate list of scams targeting tax professionals, scams targeting payroll and human resource professionals. They also provide advice to prevent scams from fraudsters who pose as Tax Advocacy Panel (TAP) professionals.

People should be aware of these scams. And remember - what is the single most important thing the IRS says about its communications with the public?

The IRS never initiates contact with taxpayers by email, text messages or social media channels to request personal or financial information.

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Mark R. Hake, CFA writes articles at InvestorPlace.com, Barchart.com, Medium.com, and Newsbreak.com as well as a Beehiiv free newsletter on stocks and cryptos.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ
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