IRS’s Dirty Dozen Tax Scams for 2022

Each year, the IRS releases a list of tax scams as a warning to taxpayers to beware. This year’s list has many of the same scams reported in previous years. There are some new additions (IR-2022-113, IR-2022-117, IR-2022-119, IR-2022-122, IR-2022-125). Taxpayers who have engaged in any of following transactions or who are contemplating engaging in them should carefully review the underlying legal requirements and consult independent, competent advisers before claiming any purported tax benefits. Taxpayers who have already claimed the purported tax benefits on a tax return should consider taking corrective steps, such as filing an amended return and seeking independent advice. Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list, and the IRS may assert accuracy-related penalties ranging from 20% to 40%, or a civil fraud penalty of 75% of any underpayment of tax. The following are the 12 scams featured this year:

1. Use of charitable remainder annuity trust (CRAT) to eliminate taxable gain
2. Maltese (or other foreign) pension arrangements misusing a treaty
3. Puerto Rican and other foreign captive insurance scams
4. Monetized installment sales
5. COVID-19-related scams. These include Economic Impact Payment and tax refund scams, unemployment fraud leading to inaccurate taxpayer 1099-Gs, fake employment offers posted on social media, and fake charities that steal your money.
6. Unscrupulous tax companies that run Offer in Compromise (OIC) mills and unscrupulous tax preparers who are “ghost preparers” or promise inflated refunds (without signing the returns).
7. Bogus calls, texts, emails, and online posts
8. Spear phishing (an email scam that attempts to steal a tax professional’s software preparation credentials)
9. Concealing assets in offshore accounts and improper reporting of digital assets
10. High-income individuals who don’t file tax returns
11. Abusive syndicated conservation easements
12. Abusive micro-captive insurance arrangements