IRS 2022 "Dirty Dozen" Tax Scams

[Julio Gonzalez]

The IRS released their 2022 list of “Dirty Dozen” tax scams for taxpayers to watch out for. There are many schemes out there that are advertised to create a large amount of tax savings. We are seeing more and more of these advertised online. A key thing to remember is that whatever you put on your tax return, you are legally responsible for it. So be sure that you have sufficient documentation for everything on your return in the event of an audit. Here is the list of the “dirty dozen” scams.

Arrangements that are potentially abusive:

1. Monetized Installment Sales: violation of anti-pledging laws
2. Maltese Treaty Benefits for Pensions: Misuse of treaty provisions
3. Foreign Captive Insurance: abnormal pricing, implausible risks, the company has no business purpose for entering into the arrangement
4. Charitable Remainder Annuity Trusts (CRATS): to eliminate taxable gains

Fraud that is consumer focused:

1. Anonymous Communications: Scammers with the intent of defrauding taxpayers
2. Offer in Compromise (OIC) Mills: Companies that offer to settle your debt with IRS but leave you in a worse position
3. Spear Phishing: Pretending to be the IRS
4. COVID-Related Fraud: Identify theft

High-Net-Worth Activities

1. High-Earner Failure to File: taxpayers with over $100k in income that fail to file tax returns
2. Micro-captive Insurance Arrangements: Nonexistent insurance coverage
3. Offshore Accounts and Digital Assets: Hiding income
4. Syndicated Conservation Easements: Unwarranted and inflated tax deductions

As always, if something seems too good to be true, it most likely is. Be cautious when it comes to items in the list above. If you have questions, be sure to discuss it with your CPA ahead of time.