1. Use of Charitable Remainder Annuity Trust (CRAT) to eliminate taxable gain- Thinking about making a major contribution to your favorite charity? A charitable remainder trust (CRT) might be just what you’re looking for. A CRAT is a type of CRT where a taxpayer transfers assets to the trust which then pays a fixed income to a designated noncharitable beneficiary. The scam comes in when a taxpayer transfers appreciated property to a CRAT and improperly claims that the transfer provides a stepped-up basis to fair market value (FMV), treating the transfer as a sale to the trust. The CRAT will then unlawfully sell the property while not recognizing gain (due to the claimed step up in basis). The CRAT will then buy a single premium immediate annuity (SPIA) with the proceeds from the unlawful sale. The beneficiary of the trust will report only a small portion of the annuity income, incorrectly treating the remainder as excluded return of investment. The IRS is keeping an eye on these scams!
2. Maltese (or other Foreign) pension arrangements misusing treaty- This scam involves U.S. citizens or U.S. residents trying to avoid U.S. tax by contributing to foreign individual retirement account in Malta or other foreign countries. An individual using this unlawful strategy will claim that the foreign arrangement is a pension fund for U.S.-Malta treaty purposes, and therefore exempt from U.S. income tax on earnings in and distributions from the arrangement.
3. Puerto Rican and Other Foreign Captive Insurance- This scam involves U.S. owners of closely held entities getting involved in purported insurance arrangements with a Puerto Rican or other foreign corporation, specifically with cell arrangements or segregated asset plans that the U.S. owner has a financial interest in.
4. Monetized Installment Sales- In this scam, a seller will receive an installment sale’s proceeds through purported loans. The seller will typically enter into a contract to sell appreciated property to a buyer for cash and then sell the same property to an intermediary (in return for an installment note). After that, the intermediary will then sell the property to the buyer and receive the cash purchase price.
5. Pandemic related scams:
   -Economic impact payment and tax refund scams- While most people eligible for economic impact payments (EIPs) or stimulus payments will receive them automatically from the IRS, there are identity thieves who will try to steal them. Be wary of text messages, phone calls, or emails requesting you to supply bank account information, click a link, or verify data. The IRS will never initiate contact via phone, email, text or social media to request info related to EIPs.
   -Unemployment fraud leading to inaccurate taxpayer 1099-Gs- Due to increased unemployment compensation amid the COVID pandemic, scammers are taking advantage by filing fraudulent unemployment compensation claims using stolen personal information for people who have not filed claims. If you receive a form 1099-G for unemployment compensation that you did not receive, contact your appropriate state agency for a corrected form.
   -Fake employment offers posted on social media- If you see a job posting on social media, it could be a scam. There has been a surge of unemployed people due to the pandemic, which has led to scammers creating fake posts to entice people to apply and provide their personal financial information. Once this information gets into the wrong hands, it can be used to file a fraudulent tax return. Stay vigilant!
   -Fake charities that steal your money- Be wary of charities with names similar to nationally known organizations—they could be phony! Take a minute to ensure that you’re donating to a legitimate charity. IRS.gov has a search feature, Exempt Organizations Select Check that allows you to find legitimate, qualified charities to which donations may be tax-deductible. Scammers will often exploit national disasters and pandemics by setting up fake charities to steal your information.
6. Offer in compromise mills- Taxpayers will also want to be wary of misleading tax debt resolution companies that can settle tax debts for “pennies on the dollar” through an “Offer in Compromise” or OIC. These offer taxpayers the chance to reduce their tax bill if they meet certain, very specific criteria. Unscrupulous companies will oversell the program to unqualified candidates so they can collect a fee from taxpayers who are already in debt. Known as “OIC mills,” these scams cast a wide net for taxpayers, charge pricey fees and churn out applications for a program they are unlikely to be eligible for.
7. Bogus phone calls, texts, emails and online posts- Did you receive a threatening phone call from the “IRS” asking you to pay an overdue tax bill through a wire transfer or prepaid debit card? This is a scam! The IRS will never call you without first sending a bill through the mail. They will also never request an immediate payment without allowing you to question it, require that you pay in a certain manner, and of course they would never threaten you with arrest, deportation, etc. Watch out for texts, emails and online posts of a similar nature—NEVER click on a link that seems suspicious.
8. Spearfishing- This is an email scam where a criminal will attempt to steal a tax professional’s software preparation credentials in order to file fraudulent tax returns for refunds.
9. Concealing assets in offshore accounts/improper reporting of digital assets- Scammers avoid taxes by hiding money or assets in unreported offshore accounts. They will then access the funds through debit cards, credit cards, wire transfers or other arrangements. U.S. taxpayers are required to report income from offshore funds and other foreign holdings. Additionally, some taxpayers are not reporting digital assets properly—there is an incorrect assumption that digital asset accounts are “undetectable by tax authorities”. The IRS urges taxpayers to not conceal their digital asset holdings.
10. High income individuals neglecting to file- The IRS is on the look out for high income individuals who neglect to file a tax return. Those high-income taxpayers, especially those earning more than $100,000 per year are encouraged to file ASAP if they have yet to do so. The failure to file penalty is typically 5% of the unpaid taxes for each month or part of a month that a return is late.
11. Abusive syndicated conservation easements- The IRS is warning taxpayers to avoid syndicated conservation easements. In this scam, promoters take a provision of the tax law allowing for conservation easements and use inflated appraisals of undeveloped land to inflate tax deductions.
12. Abusive micro-captive insurance arrangements- In this scam, promoters, accountants and wealth planners persuade owners of closely held entities to become involved in schemes that fail to match genuine business needs or duplicate the taxpayer’s commercial coverages.

Questions on the dirty dozen scams and how you can better protect yourself? We are here to help.