If it seems as if every few months my newsletter deals with the IRS’s announcement of a new tax scam, you would be correct. The IRS reports that this past tax season there was an increase in activity involving tax scams aimed at defrauding taxpayers and in efforts to discover gaps in government and industry defenses to hacks and scams. The IRS further reports that it has seen hundreds of thousands of suspicious claims filed by taxpayers claiming credits for which they are not eligible. These scams enrich fraudsters at the expense of taxpayers, many of whom are the most vulnerable in our community.

The IRS announced in mid-August that it had joined forces with state taxing authorities, tax software companies, financial companies and national tax professional associations in an effort to combat the increase in tax scams which harm taxpayers and threaten national and state tax systems. This task force will be known as the Coalition Against Scam and Scheme Threats (CASST). The coalition has garnered support from more than sixty private sector groups. Some of the entities participating in this effort may be familiar to taxpayers such as H&R Block, Intuit (Turbo Tax), Liberty Tax, Jackson Hewitt, Thompson Reuters, Cash App and Square to name a few. For a complete list see:  https://www.irs.gov/newsroom/statements-of-support-from-leading-members-of-the-nations-tax-community-for-coalition-against-scam-and-scheme-threats-task-force

The coalition is an outgrowth, and modeled on the Security Summit which was established by the same groups in 2015 to combat tax-related identity theft. The combined efforts of all improved the sharing of information between participants, identified approaches to tackle identity theft, improved internal system defenses and led to wide ranging public education campaigns targeting taxpayers and tax professionals. While tax identity theft has not disappeared, the efforts of the Summit resulted in improved protections for taxpayers.

The members of the new task force have agreed that the purpose of the group is to better protect taxpayers from fraudsters. The coalition aims to: (1) expand education about emerging scams not just during tax season, but throughout the year, (2) develop new approaches to identify potentially fraudulent returns at filing and (3) improve infrastructure to protect not only taxpayers, but also federal, state and industry tax systems. It is believed that this collaborative approach between the private and public sectors will present a united and stronger front against the promoters of fraudulent scams. By working together, information will be shared faster, threats of new scams can be responded to more quickly, and the public alerted to the new scams. The coalition’s goal is to have a substantial effect on the increasing threat of scams against taxpayers and their proliferation through social media.

The coalition will work to put protections in place at the federal and state levels and in the private sector in time for the 2025 filing season. Members will work to improve defenses in their systems so that it will be more difficult for scammers to file fraudulent returns. They will also work to make long-term changes which will improve their ability to identify and stop scams. Their goal is to improve the validation methods for preparer identification numbers and to combat paid tax preparers who prepare returns, but do not sign them as required by law. Many times, these preparers inflate tax refunds leaving the taxpayer on the hook when the IRS audits the return. See: https://magdaabdogomezlaw.com/choosing-a-reputable-tax-preparer/

Scammers will never disappear, however, by working together it is hoped that the problem can be tamed. Each one of us is also part of the solution. We need to be vigilant, educate ourselves regarding scams, work only with reputable preparers, and educate those around us.