 Internal Revengers IRS tax news! IRS wraps up 2,023 dirty dozen list reminds taxpayers and tax pros to be wary of scams and schemes even after tax season. The dirty dozen. Honestly, the name seems to imply all doughnuts are treated equal under the doughnut cover of the law. Which is ridiculous. There must be some that need to be treated more dirty than the rest. I mean, look at that dirty doughnut with the wild orange frosting on top. That doughnut needs to be doused in milk and frog-marched into the mouth of a hungry alligator or something. Why? What did he do, you may be asking? Has his dirty orange doughnuts family been picking up huge sums of political payoffs all over the world? Did the orange top doughnut collect massive amounts of money from questionable speaking engagements or use questionable charitable organizations to collect huge sums of money? No. No worse. Worse than that. The dirty wild orange top doughnut didn't properly classify a few bucks of expenses paid to jelly Daniel's doughnut down the street for something that happened like forever ago. Huh. Wait, that doesn't seem to be anywhere near the level of what the other dirty doughnuts do. But don't worry. Don't worry. Every dirty doughnut has the right to equality or equity under the doughnut box lid. Hey, hey, why do you keep shutting the lid on the head of that dirty orange doughnut? I mean, it kind of looks like you intentionally put his head into the door frame and then repeatedly shut the lid on it for crying out loud. Honestly, they don't want to have to repeatedly shut the door on the dirty, crazy orange glazed doughnut's head. It's really a deeply depressing duty they must perform for the good of the country. It's a sad day for America. Hard stop. This is no time for celebration for a long time, but I'm sad that this has happened. It's sad. And this is a day of profound sadness. Because it's a sad moment to see a former president have to do this, even though we feel it could lead to justice. This is a sad day for America. It's a sad day for America. It's a sad day. It's like, yeah, right. The press is like, yay, we got him this time. And apparently, under our new legal regime, his only legal defense at this point is to claim he's a woman. Although, although even that defense is questionable, as it's generally only used to free rapists. But whatever, this is getting ridiculous. You know what? I feel like we've seen this movie before. Do we really have to do it again? I mean, honestly, the press is like a five-year-old child that just wants to run the same movie scene over and over and over again. Well, the rest of the room is like, come on, come on, not again. Give me a hump and break for crying out loud, please. Porfa vor, not again. Porfa freaking vor, make it stop. Porfa freaking for the love of God vor. IR2023-71, April 5, 2023, Washington. The Internal Revenue Service wrapped up the annual Dirty Dozen list. There's a list, there's a link to that list here of tax scans for 2023 with a reminder for taxpayers, businesses, and tax professionals to watch out for these schemes throughout the year, not just during tax season. Many of these schemes peak during filing season as people prepare their tax returns. In reality, these scams can occur throughout the year as fraudsters look for ways to steal money, personal information, data, and more. To help people watch out for these scams, the IRS and the Security Summit partners are providing an overview, recapping this year's Dirty Dozen scams. Scammers are coming up with new ways all the time to try and steal information from taxpayers and, quote, said IRS Commissioner Danny Warfell, quote, people should be wary and avoid sharing sensitive personal data over the phone, email, or social media to avoid getting caught up in these scams. I say just turn the things off, just turn, put the phone down, put it down, it's cancer, cancer in your palm, in any case. And people should always remember to be wary if a tax deal sounds too good to be true, end quote, working together as the Security Summit. The IRS, state tax agencies, and the nation's tax industry, including tax professionals, have taken numerous steps since 2015 to warn people about common scams and schemes during tax season beyond that can increase the risk of identity theft. The Security Summit initiative is committed to protecting taxpayers' businesses in the tax system from scammers and identity thieves. Some items on this year's list were new and some made a return visit. While the list is not a legal document or a formal list of agency enforcement priorities, it is intended to alert taxpayers and tax professional community about various scams and schemes. 2023 dirty dozen summary, we have the employee retention credit claims, there's a link to that here. Taxpayers should be aware of aggressive pitches from scammers who promote large refunds related to the employee retention credit, that's the ERC. There's a link to that. The warning follows blatant attempts by promoters to con ineligible people to claim the credit. The IRS highlights these scams from promoters who have been blasting ads on radio and the internet touted refunds involving employee retention credits. These promotions can be based on inaccurate information related to the eligibility for and computation of the credit. Additionally, some of these advertisements exist solely to collect the taxpayers' personal identifiable information in exchange for false promises. The scammers then use the information to conduct identity theft. Then we've got the good old fishing and smishing. There's a link to that here. Taxpayers and tax professionals should be alert of fake communications from those posing as legitimate organizations in the tax and financial community, including the IRS and states. These messages arrive in the form of unsolicited text, smishing or email phishing to lure unsuspecting victims to provide valuable personal information that can lead to identity theft. The IRS initiates most contacts through regular mail and will never initiate contact with taxpayers by email, text, or social media regarding a bill or tax refund. Then you've got the online account help from third-party scammers. There's a link to that here. You've got swindlers who pose as, quote, helpful, end quote. Yeah, it's probably, anyway, third party and offer to help create a taxpayers' IRS online account at irs.gov. So in reality, no help is needed. So be careful of those people. Say, we're just trying to help you. Let us help you. And then they totally mess everything up. Do it on purpose and steal stuff from you. So be careful. So the online account provides taxpayers with valuable tax information, but third parties make these offers will try to steal a taxpayers' personal information this way. Taxpayers can and should establish their own online account through the irs.gov. So you don't need help with that. It should be fairly easy. They were making it difficult for a while because they were trying to give you facial recognition and stuff, and that was quite complicated. And I feel like quite intrusive of the government getting no bank needs that kind of stuff. But I think they took that away now, so it should be fairly easy. False fuel tax credit claims is the next one. There's a link to that here. You got the fuel tax credit. It's meant for off-highway business and farming use and as such is not available to most taxpayers. So you don't get this credit for just driving normally. It's for special purposes for farming trucks and big highway things, not your car. However, unscrupulous tax returns preparers and promoters are enticing taxpayers to inflate their refunds by erroneously claiming the credits. The IRS has been on increase and increase in the promotion of filing certain refundable credits using form 4136 credit for federal tax paid on fuels. Then you got the fake charities. There's a link to that here. Bogus charities are a perennial problem that gets bigger whenever a crisis or natural disaster strikes. So whenever there's a problem, then the result of that problem is often going to be fraudsters in with everything else. So scammers set up these fake organizations to take advantage of the public's generosity. They seek money and personal information which can be used to further exploit victims through identity theft. Batman should go after those guys. They seem really bad. Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions. But charitable donations only count if they go to a qualified tax exempt organization recognized by the IRS. Then you got the unscrupulous tax return preparers. That's the next one on the list. There's a link to that here. Most tax preparers provide outstanding and professional services. I know I do. However, people should be careful of shady tax professionals and watch out for common warning signs including charging a fee based on the size of the refund. That's a signal. It's not good. Red flag. A major red flag or bad sign is when the tax preparer is unwilling to sign the dotted line. Avoid these quote ghosts in quote preparers who will prepare a tax return but refuse to sign or include their IRS preparer tax identification number. Otherwise, notice the P 10 as required by law. Taxpayers should never sign a blank or incomplete return. Then we've got the social media. You got the fraudulent form filing and bad advice from the social media. There's a link to that here. Social media can circulate inaccurate or misleading information mainly from the mainstream media on there because they're starting to use social media too. So that means they're kind of misinformation is flowing all the way everywhere now even on the socials. Any case and the IRS has recently seen several examples. These can involve common tax documents like the W 2 or more abusive ones like the form 8 9 4 4 while form 8 9 4 4 is real. It is intended for a very limited specific specialized group. Both schemes encourage people to submit false inaccurate information in hopes of getting a refund. Taxpayers should always remember that if something sounds good to be true, it probably is. And then you've got the spear phishing and cyber security for tax professionals next item. There's a link to that here. You got the phishing is a term given to emails or text messages designed to get users to provide personal information. The spear phisher is a tailored phishing attempt to a specific organization or business. So the IRS is warning tax professionals about spear phishing because there is a greater potential for harm if the tax preparer has a data breach. A successful spear phishing attack can ultimately steal client data and tax preparer identity allowing the thief to file fraudulent returns. Don't be the fish on the spear phishing thing. You want to be a non fish or at least one that gets away. Offer and compromise mills is the next one. There's a link to that here. Offer and compromise are an important program to help people who can't pay to settle their federal tax debts. But quote mills and quote can aggressively promote offers and compromise in misleading ways to people who clearly don't meet the qualifications. Frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using IRS offer and compromise pre qualifier tool. So you want to make sure you do your own research. Remember these mills aren't just the mills of the 10. You might imagine like a tax for firm is the mill, but a big part of the mill is the sales funnel, which is also the advertising. So you've got advertising firms that are doing the advertising and then funneling their leads to the different firms. So you really don't even know who you're working with is the point when you're doing this. So you want to do your own research. Scams aimed at high income filers. Here's the high income side of things. We got the charitable remainder annuity trust is CRAT charitable remainder trust are irrevocable trust that let individuals donate assets to charity and draw annual income for life or a specific period. Unfortunately, these trusts are sometimes misused by promoters, advisors and taxpayers to try to eliminate ordinary income and or capital gains on the sale of the property. Then you got the monetized installment sales. And these potentially abusive temp transactions promoters find taxpayers seeking to defer the recognition of gain upon the sale of a appreciated property. They facilitate a purported monetized installment sale for the taxpayer in exchange for a fee. And you got bogus tax avoidance strategies. These include the micro captive insurance arrangements. A micro captive is an insurance company whose owners elect to be taxed on the captives investment income only abusive micro captive involves scams that lack many of the attributes of legitimate insurance. These structures often include impossible implausible risks failure to match genuine business needs and in many cases unnecessary duplication of taxpayers commercial coverage. Then you've got the syndicated conservation easements. A conservation easement is a restriction on the use of real property. Generally taxpayers may claim a charitable contribution deduction for the fair market value of a conservation easement transferred to a charity. If the transfer meets the requirements of the Internal Revenue Code 170 and abusive arrangements, which generate high fees for promoters, participants attempt to game the tax system with grossly inflated tax deductions. Next item, the next one is scams with international elements. You're going offshore with the scam and this time offshore accounts and digital assets. The IRS continues to scrutinize attempts to hide assets and offshore accounts and accounts holding digital assets such as cryptocurrency. The IRS continues to identify individuals who attempt to conceal income in offshore bank brokerage accounts, digital asset accounts and nominee entities. Asset protection professionals and unscrupulous promoters continue to lure U.S. persons into placing their assets in offshore accounts and structures saying they are put out of reach of the IRS. These assertions are not true. The IRS can identify and track anonymous transactions of foreign financial accounts as well as digital assets. And then you've got the Maltese Individual Retirement Arrangement Misusing Treaty. So these arrangements involve U.S. citizens or residents who attempt to avoid U.S. tax by contributing foreign individual retirement arrangements in Malta or potentially other countries. The participants in these transactions typically lack any local connection to the host country by improperly asserting the foreign arrangement as a, quote, pension fund, end quote, the U.S. tax treaty purposes for four per U.S. tax treaty purposes because you got a tax treaty between the country. So they're abusing the tax treaty thing. The U.S. taxpayer misconstrues the relevant treaty provisions and improperly claims and exemption for U.S. income tax on gains and earnings in a distribution from the foreign individual retirement arrangement. Next, we've got the Puerto Rican and foreign captive insurance. U.S. business owners of closely held entities participate in a purported insurance arrangements with Puerto Rican or other foreign corporation in which the U.S. business owner has a financial interest. The U.S. business owner or a related entity claims a deduction for amounts paid or premiums for, quote, insurance coverage, end quote, provided by a front-end carrier which reassures the, quote, coverage, end quote, with the Puerto Rican or other foreign corporation. Despite being labeled as insurance, these arrangements lack many of the attributes of legitimate insurance. Where appropriate, the IRS will challenge purported tax benefits from these types of transactions and impose penalties. The IRS criminal investigation division is always on the lookout for promoters and participants of these types of schemes. Taxpayers should think twice before including questionable arrangements like this and their tax returns. You best watch yourself. You best think twice. You need to get a full-length mirror. Why? Because you got to watch yourself. After all, taxpayers are legally responsible for what's on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know and trust. Help stop fraud and scams, people. Help stop the stuff. As part of the dirty-dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes, as well as tax return preparers who deliberately prepare improper returns to report an abusive tax scheme or a tax return preparer. People should mail or fax completed form 14242 reports suspected abusive tax promotions or preparers and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigation. There's a mailing address here. There'll be a link to this in the description so you can find that. Alternatively, taxpayers and tax practitioners may send the information to IRS Whistleblower Office. There's a link to that for a possible monetary reward. Woo-hoo! Cash in on turning them in. Cashin' in on turning them in. So for more information, you can see abusive tax schemes and abusive tax return preparers. Here, there's a link to that. There'll be a link to this in the description.