In April 2024, the IRS sent out a news release regarding the 2024 Dirty Dozen recap list of tax scams with the goal to remind taxpayers and tax professionals to beware of schemes. Though fraudsters strike more frequently during filing season, schemes may arise at any time throughout the year.
The IRS is warning the public against sharing personal information over the phone, email, and social media, since these fraudsters specialize in identity theft and the stealing of funds and data. The Dirty Dozen campaign lists out various abusive tax schemes that aim to catch taxpayers and businesses unaware. This year, the list focuses on tax avoidance and international issues, including:
- Tax fraud, or tax avoidance, strategies like syndicated conservation easements (abusive tax arrangement that acts as a shelter or inflation of tax deductions) and micro-captive insurance (when owners of the insurance company choose to be taxed solely based on captive’s investment income).
- International schemes, such as the Maltese retirement arrangement to hold accounts and financial assets offshore.
- Offshore accounts and digital assets: Individuals may attempt to hide assets in offshore accounts or through cryptocurrency, non-fungible tokens (NFTs), or stablecoins. Asset protection professionals and promoters may also lure individuals to use these tactics by inaccurately claiming that the IRS won’t be able to identify the hidden goods.
Blowing the Whistle on IRS-Related Fraud and Scams
- As part of the Dirty Dozen campaign, the IRS encourages individuals to report any abusive tax schemes and suspicious tax return preparers or promoters.
- Taxpayers and tax practitioners may report violations to the IRS Whistleblower Office and may be eligible to earn significant monetary awards.
- Individuals are encouraged to mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers to IRS Lead Development Center in the Office of Promoter Investigations.
Whistleblowers seeking legal advice may contact Kohn, Kohn & Colapinto for a consultation.
