Q: What should taxpayers keep in mind for tax filing season?
A: The IRS will start accepting and processing individual tax returns on Jan. 29 for the 2023 tax year. As taxpayers across America gather financial information to document employment, investment and retirement income, as well as receipts and invoices for medical, childcare, education expenses, charitable donations and property deductions, it’s important to be wary of tax scams.
Every year the IRS reports on the so-called Dirty Dozen to alert the taxpaying public about trending frauds that put people’s money, financial information and identity at risk. My advice for taxpayers and tax professionals boils down to one simple rule: If something sounds too good to be true, it’s most likely not on the up and up. Trust your gut instinct and protect yourself from getting scammed. For example, the #1 tax scam from the Dirty Dozen list last year involved the Employee Retention Tax Credit (ERC). Fraudsters targeted small businesses and relentlessly promoted the pandemic-era tax credit via the internet and radio ads. In some cases, the scheme included harvesting taxpayers’ personally identifiable information by tricking small businesses with the false promise of large tax refunds. Businesses who may have filed a claim due to promoter pressure can learn more here about retracting a claim or partially repaying the ERC through the Voluntary Disclosure program.
Another common scam involves imposter communications whereby the fraudster poses as an IRS agent or authority working for a legitimate organization in the tax and financial ecosystem. When in doubt, taxpayers need to keep in mind a vital distinction. The IRS starts most communication with taxpayers through postal mail and will not call about making a payment without first sending a statement through postal mail. Be mindful the IRS will not initiate correspondence with taxpayers via email, text or social media. What’s more, the IRS will not ask for credit or debit card numbers over the phone, or require payment with a prepaid debit card, gift card or wire transfer. Scammers also try to dupe taxpayers owed a refund into providing banking and other sensitive information; they may leave threatening messages to return their calls. These are red flags of a potential scam. I’ve also sounded the alarm about scams generated by artificial intelligence (AI) and called upon the IRS Commissioner to prepare for a proliferation of deceptive tactics targeting families, older Americans and small businesses using AI tools.
Q: How can taxpayers find assistance or report a scam?
A: The U.S. Treasury Inspector General for Tax Administration (TIGTA) investigates tax fraud, identity theft, scams and crimes. Report fraud, stolen refunds or threats to TIGTA’s hotline or by calling (800) 366-4484.
Although my Senate office can’t help constituents file taxes, my staff can help Iowans navigate red tape and resolve issues with the IRS through the Taxpayer Advocate Service. For assistance, Iowans first need to complete a request form to allow my office to inquire on your behalf with federal agencies. When it’s time to file a tax return, be wary of paid professionals who refuse to sign the return or include their IRS Preparer Tax Identification Number (PTIN). This is required by federal law. Additionally, taxpayers should never sign a blank or incomplete tax return.
Resources for people who earn less than $64,000, individuals with disabilities and taxpayers age 60 and older are available for free tax assistance through IRS-certified volunteers in local communities. Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) operate in local libraries, schools and community centers. Find a location using the VITA Locator or call (800) 906-9887.
Q: What other issues should taxpayers know this filing season?
A: The deadline to file 2023 tax returns is April 15, 2024. Eligible taxpayers, which includes those with adjusted gross income of $79,000 or less, may qualify to file electronically for free through the IRS Free File program. Taxpayers also can use a tool on the IRS website to check eligibility for the Earned Income Tax Credit that has been adjusted for inflation. Although the quickest way to receive a refund is through electronic filing and setting up direct deposit, the IRS will not start issuing refunds until late February. The IRS delayed a controversial reporting requirement enacted by the American Rescue Plan Act that requires payment processing companies such as Venmo, Zelle and PayPal to report transactions to the IRS exceeding $600. Similar to my legislative efforts that would rein in overreach by the IRS to snoop on the average American’s financial transactions, I’m cosponsoring legislation to repeal the drastic new reporting requirements. For the 2023 tax year, payment transactions above $20,000 and more than 200 transactions will trigger a 1099-K tax form from these payment platforms. Looking ahead, absent change in law, the IRS plans to gradually phase in implementation of the $600 threshold. For transactions in 2024 (tax returns due in 2025), the IRS intends to reduce the threshold to $5,000. Be assured, I’ll continue my oversight efforts toprotect taxpayer rights and hold the IRS accountable to Congress and the American people.