IRS Highlights Five “Dirty Dozen” Tax Scams that Present Risks for Taxpayers in 2021 and 2022

The Internal Revenue Service (IRS) maintains a list of tax scams which it refers to as the “dirty dozen.” These are scams that target U.S. taxpayers and present risks not only for direct monetary loss but for tax problems as well. Recently, the IRS highlighted five scams from its “dirty dozen” that present risks for taxpayers in 2021 and 2022. Here, Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses these scams—and what taxpayers should do if they fall victim to fraud.

1. Donating to a Fake Charity (and Then Claiming a Charitable Deduction)

The IRS is warning taxpayers to be cautious of donating to fake charities—particularly those seeking to take advantage of the COVID-19 pandemic. Unfortunately, there are many of these scams out there; while taxpayers may have every intention of doing good by donating to a worthy cause, donating to a fake charity and then claiming a tax deduction amounts to federal income tax fraud.

2. Losing Control of Your Identity Due to an IRS Impersonation Scam

While the IRS notes that impersonation scams have waned in recent years, it also warns that they “remain[] a common scam.” With impersonation scams, individuals claiming to be IRS revenue agents seek to obtain taxpayers’ personal information to use for unlawful purposes. They frequently target vulnerable individuals (the IRS spotlights scams targeting immigrants and seniors in particular), and they can lead to a range of problems for taxpayers who lose control of their identities.

3. Falling Further Behind After Paying an Offer in Compromise “Mill”

Under appropriate circumstances, negotiating an offer in compromise (OIC) with the IRS can effectively reduce a taxpayer’s outstanding liability. However, OIC “mills” often aggressively promote their services with false claims, and they “mislead[] people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.” Not only can taxpayers who use these mills end up losing the fees they pay, but they can fall further behind on their tax debt as well.

4. Submitting a False Return Completed by a “Ghost” Preparer

When you hire a tax preparer, your preparer should sign your tax return. “Ghost” preparers do not do so—and there is a good reason why. They are typically unqualified, and they seek to take advantage of taxpayers who do not have a clear understanding of the qualifications required to provide tax preparation services. As a U.S. taxpayer, you are personally liable for the contents of your return, and you can face substantial penalties if your return is inaccurate—even if it was prepared by someone else.

5. Unintentionally Committing Unemployment Insurance Fraud

The IRS is also warning of scams related to companies’ unemployment insurance tax liability. Companies that engage third parties to help them secure government assistance to which they are not legally entitled (either knowingly or unknowingly) can face significant penalties, and they can end up substantially underpaying their federal unemployment insurance tax liability.

Request a Consultation with Boston Tax Lawyer Kevin E. Thorn

Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, brings well over a decade of experience to helping individuals and companies resolve complicated tax issues. If you need help dealing with the IRS, you can call 617-692-2989, email ket@thornlawgroup.com or get in touch with us online to arrange a confidential consultation.