By: Richard L. Smith
As tax season hits its peak, the Internal Revenue Service’s Criminal Investigation Division (IRS-CI) is urging taxpayers and tax professionals to remain vigilant amid a spike in tax-related scams. These schemes pose significant risks, including identity theft, financial loss, and possible legal consequences.
According to a statement released by national IRS officials, fraudsters are using increasingly sophisticated tactics to exploit unsuspecting individuals and compromise the integrity of the U.S. tax system. From elaborate refund schemes to cyberattacks on tax preparers, the threat landscape is growing.
Trending Tax Scams to Watch Out For
IRS-CI has flagged several recurring scam methods during this year’s filing season:
Fake Estates and Trusts: Some fraudsters are creating fictitious estates or trusts to claim fraudulent tax refunds.
New Client Impersonation Scams: Cybercriminals are pretending to be potential clients to trick tax professionals into opening malicious email attachments or links, allowing them access to sensitive client data.
Misinformation on Social Media: Misleading posts are circulating online, promoting the use of false income, incorrect withholdings, or fabricated tax credits. Regardless of the source, taxpayers remain fully responsible for the information submitted on their tax returns.
In an official statement, an IRS spokesperson stressed: “Taxpayers must protect both their personal information and their wallets. Falling for one of these schemes can have lasting financial and legal consequences.”
Tips for Staying Safe During Tax Season
To avoid becoming a victim, the IRS offers several key recommendations:
Be cautious of unsolicited calls, texts, or emails claiming to be from the IRS.
Only work with trusted, qualified tax professionals who include their Preparer Tax Identification Number (PTIN) on all tax documents.
Use the official IRS website (IRS.gov) to verify information regarding tax credits, deductions, and filing requirements.
IRS-CI’s Continued Efforts Against Tax Fraud
As the law enforcement arm of the IRS, IRS-CI investigates a wide range of financial crimes, including tax fraud, identity theft, money laundering, and more. Nearly 70% of the division’s resources are dedicated to identifying and prosecuting tax-related crimes.
In fiscal year 2024, IRS-CI initiated 1,373 investigations related to tax fraud, uncovering more than $2.1 billion in fraudulent activity. These investigations resulted in 615 individuals being sentenced, with the average sentence lasting 27 months.
Case Example: West Orange Tax Preparer Sentenced for Fraud
A recent case highlighted by IRS-CI involved Michael Ewell Sr., the owner of Ewell Tax Center in West Orange, New Jersey. In October, Ewell was sentenced to one year and one day in federal prison after filing over 150 fraudulent tax returns between 2015 and 2022. He claimed false deductions, credits, and business expenses to obtain inflated refunds totaling more than $824,000.
Ewell also underreported his business income and claimed fictitious expenses from 2017 to 2020, resulting in an additional $118,000 in tax losses. In addition to his prison sentence, Ewell was ordered to pay $736,581 in restitution, serve one year of supervised release, and is permanently banned from preparing tax returns for others.
Stay Informed and Report Fraud
The IRS urges both taxpayers and professionals to report suspicious behavior and potential scams. Questions and tips can be sent to the IRS Criminal Investigation Division at newsroom@ci.irs.gov.
While tax season may bring the anticipation of refunds, it also heightens the risk of fraud. Remaining informed and cautious is essential to safeguarding your personal and financial information.
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