AICPA joins coalition to fight intensifying tax scams, schemes

Over 60 groups, including the AICPA, have formed a coalition to fight scams and schemes directed at taxpayers that intensified during the previous filing season, the IRS said in a news release Friday.

The Coalition Against Scam and Scheme Threats (CASST), convened at the request of IRS Commissioner Danny Werfel, includes federal and state tax agencies, software and financial companies, and national professional associations.

CASST members set three approaches to their work:

• Expand outreach and education about emerging scams;

• Develop new approaches to identify potentially fraudulent returns at the point of filing; and

• Create infrastructure improvements to protect taxpayers as well as federal, state, and industry tax systems.

AICPA involvement

“Since its inception, the AICPA has worked tirelessly to protect the profession’s interest, benefiting taxpayers, tax practitioners, and tax administration. For over a decade, the AICPA has been vocal about identity theft and the need to protect taxpayers and practitioners,” said Melanie Lauridsen, vice president–Tax Policy & Advocacy for the AICPA.

“We believe that together, through the reduction of fraud, we can work to protect taxpayers from those that look to exploit the vulnerable,” she said.

Types of scams

CASST is needed because of “a rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses” by bad actors and on social media, Werfel said. “Our goal is to have a mass effect on this expanding problem.”

During the past tax season, more scams and schemes have circulated, including ones involving the fuel tax credit, household employment taxes, and the sick and family leave credit. The IRS has seen hundreds of thousands of dubious claims where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and taxpayers being required to provide documentation for the claims.

Numerous other scams and schemes continue to circulate on social media. They are highlighted through efforts including the annual IRS Dirty Dozen list. The new approach, the IRS said, will increase collaborative efforts to raise awareness and education about schemes, not just during tax season.

Coalition’s plans

The coalition will work toward new protections by the 2025 filing season, including steps to combat “ghost preparers,” who prepare tax returns for a fee but do not sign the tax return. This leaves the taxpayer at risk for what often are claims for inflated tax refunds since their name is the only one on the return.

The scams do not target individual taxpayers only. CASST also will focus on scammers who exploit weak points in government systems and the private sector, the IRS said.

Background

The coalition is an outgrowth of the Security Summit, which the same groups started in 2015 to stem the growth of tax-related security theft. While tax-related identity theft remains a concern, improved protections initiated through the summit have protected millions of taxpayers and prevented billions of dollars of fraudulent payments, the IRS said.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.