Tax season is stressful enough, and now several scams are targeting a range of taxpayers in Texas and all across the U.S.
Small business owners are the primary targets of a prevalent tax scam this season. The issue has become so severe that the IRS has issued a new warning. According to IRS officials (via WFAA), scammers are pretending to be tax preparers and are charging significant amounts to assist small business owners in applying for the Employee Retention Credit.
The Employee Retention Credit (ERC) is a legitimate program initiated during the COVID-19 outbreak to provide small businesses with relief. It is a refundable credit of $26,000, but the issue is that fraudsters are targeting individuals who are ineligible for this credit.
The IRS has reported that these scammers are actively promoting their fraudulent schemes on the internet and radio and are charging high upfront fees or contingent fees based on the refund amount.
Improperly claiming this credit could result in penalties and interest, and you may be required to repay the credit. To avoid any such complications, it is recommended that you review the Employee Retention Credit guidelines to ensure your eligibility before attempting to claim the credit.
But this is not the only scam going around this year.
There are several other tax scams that are prevalent this season including:
- Encouraging taxpayers to use their wage information on tax returns to claim fraudulent credits in the hopes of receiving a large refund
- Evolving phishing scams that utilize various pandemic-related themes to steal client information
- Criminals posing as IRS agents through aggressive phone calls to steal taxpayer money or personal information
- Service promoters who claim their services are necessary to settle tax debts through the Offer in Compromise (OIC) program, often referred to as "OIC Mills"
- An IRS-impersonation scam that primarily targets educational institutions, including students and staff with ".edu" email addresses
- Scammers claiming to suspend or cancel Social Security numbers to frighten victims into responding to robocall voicemails
- Identity theft related to unemployment benefits
- Scammers taking advantage of the kindness of taxpayers who wish to assist victims of major disasters
To learn more about tax scams and to prevent them from happening to you, visit IRS tax scams.